The opinion
Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
2-24-2004
ANN VENEMAN, Secretary, U.S. Department of
Agriculture,NATIONAL DAIRY PROMOTION
BOARD
Precedential or Non-Precedential: Precedential
Docket No. 03-2522
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UNITED STATES COURT OF Argued: January 12, 2004
APPEALS
FOR THE THIRD CIRCUIT Before: Sloviter, Rendell and Aldisert,
Circuit Judges.
No. 03-2522 (Filed: February 24, 2004)
JOSEPH S. COCHRAN;
BRENDA S. COCHRAN, Steven M. Simpson (Argued)
Institute for Justice
Appellants 1717 Pennsylvania Ave., N.W. Suite 200
Washington, DC 20006
v.
Walter T. Grabowski
ANN VENEMAN, Secretary, U.S. Holland, Grady & Grabowski
Department of Agriculture; 61 North Washington Street
NATIONAL DAIRY PROMOTION Wilkes-Barre, PA 18701
BOARD
ATTORNEY FOR APPELLANTS
Appellees
Thomas A. Marino,
And United States Attorney
Matthew M. Collette (Argued)
FRED LOVELL; LEE GREENWALT; Douglas N. Letter
JACKIE ROOT; EARNEST NORMAN; Attorneys, Appellate Staff
STEPHEN MASHALL; CECIL Civil Division, Room 9008
MOYER; JAMES VANBLARCOM Department of Justice
Washington, D.C. 20530-0001
Intervenors-Appellees
ATTORNEY FOR APPELLEES
Richard T. Rossier (Argued)
Appeal from the United States District Alex Mendez
Court for the Middle District of McLeon, Watkinson & Miller
Pennsylvania One Massachusetts Ave. N.W. Suite 800
Washington, D.C. 20001
(D.C. Civil No. 02-cv-00529)
ATTORNEY FOR INTERVENORS-
District Judge: APPELLEES
Honorable John E. Jones, III
creating the National Dairy Promotion and
Research Board (“Dairy Board”) to
administer the program. To finance the
OPINION OF THE COURT promotional projects and the Dairy
Board’s administration of them, the Dairy
Act and implementing order require every
milk producer in the United States to pay
mandatory assessments of 15 cents per
ALDISERT, Cicuit Judge. hundredweight of milk sold.1 Id. §
4504(g); 7 C.F.R. § 1150.152. Neither the
The American public is very
Dairy Act nor the order permits dissenting
familiar with the “Got Milk? ®” ads on
milk producers to withhold contributions
television and in the print media.
for advertising or promotional projects to
This appeal requires us to decide which they object.
whether a federal statute may compel a
The Cochrans object to paying
small dairy farm in Pennsylvania to help
these assessments and filed an action in the
pay for the white-mustache milk
advertisements and other dairy promotions.
Implicated here are general First 1
The Dairy Act provides:
Amendment precepts that protect the right
to refrain from speaking and the right to
The order shall provide that each
refrain from association, and the specific
person making payment to a
issue of whether the government may
producer for milk produced in the
compel individuals to fund speech with
United States and purchased from
which they disagree.
the producer shall . . . collect an
Joseph and Brenda Cochran are assessment based upon the
independent small-scale dairy farmers. number of hundredweights of
They are not members of any dairy milk for commercial use handled
manufacturing or marketing cooperative. for the account of the producer
They alone determine how much milk to and remit the assessment to the
produce, how to sell and market it and to Board.
whom it will be sold. ...
The rate of assessment for milk . .
The Dairy Promotion Stabilization
. prescribed by the order shall be
Act of 1983, 7 U.S.C. § 4501 et seq.
15 cents per hundredweight of
(“Dairy Promotion Act,” “Dairy Act,” or
milk for commercial use or the
“Act”), provides for the creation of the
equivalent thereof, as determined
Dairy Promotion Program and authorizes
by the Secretary.
the Secretary of the Department of
Agriculture (“Secretary”) to issue an order
7 U.S.C. § 4504(g).
2
United States District Court for the Middle where and how it is produced, and thereby
District of Pennsylvania seeking a forces them to subsidize speech with
declaration that the Dairy Act violates their which they disagree.
First Amendment rights of free speech and
As the First Amendment may
association.
prevent the government from prohibiting
The Cochrans operate a small speech, it may also prevent the government
commercial dairy farm with approximately from compelling individuals to express
150 cows on about 200 acres of land in certain views, Wooley v. Maynard, 430
Tioga County, north-central Pennsylvania. U.S. 705, 714 (1977); West Virginia State
In contrast to ma ny larger-scale Bd. of Educ. v. Barnette, 319 U.S. 624,
commercial dairy farms, the Cochrans 642 (1943), or pay subsidies for speech to
employ what is known as “traditional” which individuals object, Keller v. State
methods of dairy farming. Traditional Bar of California, 496 U.S. 1, 9-10 (1990);
dairy farming is less aggressive than Abood v. Detroit Dep’t of Educ., 431 U.S.
larger-scale commercial farming, as it 209, 234 (1977).
allows cows more room to move and graze
The Cochrans’ lawsuit named as
and does not use the recombinant Bovine
defendants Ann Veneman in her official
Growth Hormone (rBGH). 2 The Cochrans
capacity as Secretary of the United States
believe that their methods result in
Department of Agriculture (“USDA”) and
healthier cows, a cleaner environment and
the National Dairy Promotion Board, and
superior milk. The Cochrans object to the
sought declaratory and injunctive relief
advertising under the Dairy Act because it
from the remittance of compelled
conveys a message that milk is a generic
assessments by all dairy producers to
product that bears no distinction based on
finance generic dairy advertisements.
Alleging that th e D air y A ct
2
unconstitutionally compels them to
rBGH, also known as
subsidize speech with which they disagree,
recombinant bovine somatotropin
the Cochrans filed a motion for summary
(rBST), is a genetically engineered
judgment contending that their case was
growth hormone administered to dairy
controlled by the teachings of United
cows to boost milk production.
States v. United Foods, Inc., 533 U.S. 405
Although the Food and Drug
(2001), in which the Supreme Court held
Administration has approved the use of
that compelled subsidies under the
rBGH for dairy production in the United
Mushroom Promotion, Research, and
States, consumer advocates and small
Consumer Information Act of 1990
dairy producers have questioned the
(“Mushroom Act”), 7 U.S.C. § 6101 et
longterm effects of the growth hormone
s e q ., vio l a t ed F i r s t A m e n d m e n t
on humans, cows and the environment.
protections.
See Barnes v. Shalala, 865 F. Supp. 550,
554 (W.D. W is. 1994). The Government filed a motion to
3
dismiss or, in the alternative, for summary scrutiny. If these communications are
judgment, arguing that this case is private speech, we must decide whether
controlled by the teachings of Glickman v. the Dairy Act violates the First
Wileman Brothers & Elliot, Inc., 521 U.S. Amendment free speech and association
457 (1997), in which the Supreme Court rights of dairy farmers. In doing so, we
upheld compelled subsidies for advertising must consider the quantum of scrutiny to
California tree fruit under two marketing be applied to determine the validity of
orders issued pursuant to the Agricultural regulations, such as the Dairy Act, that
Marketing and Agreement Act of 1937 compel commercial speech.
(“AM AA”), 7 U.S.C. § 608c et seq. The
For the reasons that follow we
Government argued that the generic dairy
reverse the judgment of the district court
advertising subsidized under the Dairy Act
and hold that the compelled speech
constitutes “government speech” and is
pursuant to the Dairy Act is private speech,
therefore immune from First Amendment
not government speech, and is therefore
scrutiny and, moreover, that the Dairy Act
subject to First Amendment scrutiny. We
is a species of economic regulation that
hold also that the Act violates the
does not violate the First Amendment. 3
Cochrans’ First Amendment free speech
The district court agreed with the
and association rights by compelling them
Government and granted summary
to subsidize speech with which they
judgment in its favor, holding that the
disagree. In so doing we conclude that the
Dairy Act survives the deferential First
subsequent Supreme Court decisions of
Amendment scrutiny afforded to economic
Glickman in 1997 and United Foods in
regulation. The Cochrans appeal.
2001 severely dilute the precedential
We must decide whether the vitality of our ultimate holding in United
challenged communications pursuant to States v. Frame, 885 F.2d 1119 (3d Cir.
the Dairy Act are government speech and 1989), in which we concluded that the
thereby immune from First Amendment compelled assessments pursuant to the
Beef Promotion Research Act of 1985, 7
U.S.C. § 2901 et seq., survived First
3
Seven Pennsylvania dairy Amendment scrutiny.
farmers who support the Dairy
I.
Promotion Act and Program petitioned
the district court for leave to intervene as In determining the side on which
defendants and the district court granted the axe must fall – on Glickman or on
the petition for intervention under Rule United Foods – we must start by
24(a) of the Federal Rules of Civil examining why the Supreme Court went
Procedure. The Intervenors filed a cross one way in its first case of Glickman and
motion for summary judgment, echoing the other way in its subsequent decision
the arguments made by the Government in United Foods.
in its motion.
4
A. marketing orders for California fruit tree
growers provided for mechanisms for
In Glickman, producers of
establishing uniform prices, limiting the
California tree fruits (including
quality and quantity of tree fruit that
nectarines, plums and peaches)
could be marketed, determining the grade
challenged the constitutionality of
and size of the fruit and orderly
regulations contained in marketing orders
disposing of any surplus. Id. at 461. The
promulgated by the Secretary pursuant to
orders also authorized joint research and
the AMAA, 7 U.S.C. § 608c et seq., that
development projects, quality inspection
imposed mandatory assessments on fruit
procedures and standardized packaging
tree growers to cover the expenses
requirements – all of which were
associated with the marketing orders,
financed by the compelled assessments.
including the costs of generic
Id.
advertising. 521 U.S. at 460. The Court
emphasized that besides the advertising The Court determined that the
decisions, the economic autonomy of the collective arrangement of the fruit tree
fruit tree growers was otherwise farmers was similar to the union
restricted by a broader collective arrangement at issue in Abood v. Detroit
arrangement set forth in the marketing Board of Education, 431 U.S. 209
orders: (1977), and the bar association at issue in
Keller v. State Bar of California, 496
California nectarines and peaches
U.S. 1 (1990). In Abood, the Court held
are marketed pursuant to detailed
that the infringement upon First
marketing orders that have
Amendment associational rights by
displaced many aspects of
compelled assessments for a union shop
independent business activity that
arrangement was “constitutionally
characterize other portions of the
justified by the legislative assessment of
economy in which competition is
the important contribution of the union
fully protected by the antitrust
shop to the system of labor relations
laws. The business entities that
established by Congress.” 431 U.S. at
are compelled to fund the generic
222. Similarly, in Keller, the Court held
advertising at issue in this
that the infringement upon First
litigation do so as part of a
Amendment associational rights by
broader collective enterprise in
compelled assessments for a state bar
which their freedom to act
program was constitutionally justified by
independently is already
the State’s interest in regulating the legal
constrained by the regulatory
profession and improving the quality of
scheme.
legal services. 496 U.S. at 13. Finding
Id. at 469. parallels between the facts of Abood and
Keller, in Glickman the Court concluded
In addition to advertising, the
that as part of the AMAA marketing
5
orders, the compelled assessments for cases involving expression by groups
generic advertising of California tree which include persons who object to the
fruit were ancillary to a comprehensive speech, but who, nevertheless, must
marketing program, and therefore were remain members of the group by law or
“a species of economic regulation that necessity.” Id. at 413 (citing Abood, 431
should enjoy the same strong U.S. at 209; Keller, 496 U.S. at 1). The
presumption of validity that we accord to Court concluded that the compelled
other policy judgments made by assessments pursuant to the Mushroom
Congress.” 521 U.S. at 477. Act were unlike the situation in Abood,
Keller and Glickman, in which:
“The opinion and the analysis of
the Court [in Glickman] proceeded upon Those who were required to pay a
the premise that the producers were subsidy for the speech of the
bound together and required by the association already were required
statute to market their products according to associate for other purposes,
to cooperative rules. To that extent, their making the compelled
mandated participation in an advertising contribution of moneys to pay for
program with a particular message was expressive activities a necessary
the logical concomitant of a valid scheme incident of a larger expenditure
of economic regulation.” United Foods, for an otherwise proper goal
533 U.S. at 412. requiring the cooperative activity.
B. Id. at 414.
Four terms later, in United Foods Fundamentally, the Court noted
the Court held that mandatory that “[w]e have not upheld compelled
assessments imposed on mushroom subsidies for speech in the context of a
producers for the purpose of funding program where the principal object is
generic mushroom advertising under the speech itself.” Id. at 415. Concluding
Mushroom Act, 7 U.S.C. § 6101 et seq., that the only program the compelled
violated the First Amendment. 533 U.S. contributions for advertising pursuant to
at 416. The Court distinguished the the Mushroom Act serve “is the very
statutory context at issue in United Foods advertising scheme in question,” the
from that in Glickman, explaining that Court ruled that the compelled
under the stand-alone Mushroom Act assessments were not permitted under the
“the compelled contributions for First Amendment. Id. at 416.
advertising are not part of some broader
C.
regulatory scheme” and the advertising
was itself the “principal object” of the Guided by the express reasoning
Mushroom Act. Id. at 415. As such, of the Court in Glickman and United
“the mandated support is contrary to the Foods, we must first look at the broader
First Amendment principles set forth in statutory scheme presented in the Dairy
6
Act, or more specifically, we must Enacted in 1983, the Dairy Act
ascertain whether the dairy producers are authorizes the Secretary of Agriculture to
“bound together and required by the establish a program for the
statute to market their products according “advertisement and promotion of the sale
to cooperative rules” for purposes other and consumption of dairy products [and]
than advertising, or speech. United for research projects related thereto.” 7
Foods, 533 U.S. at 412. It is to a U.S.C. § 4504(a). The declared purpose
description of the Dairy Act we now of the Dairy Act is to provide for “an
turn. orderly procedure for financing . . . and
carrying out a coordinated program of
promotion designed to strengthen the
II. dairy industry's position in the
marketplace . . . .” Id. § 4501(b).
The Dairy Promotion Program set
forth in the Dairy Act is one in a long The Dairy Act is a stand-alone
series of federal “checkoff” programs for law that was not passed as part of any
promoting agricultural commodities.4 other federal dairy regulatory scheme. It
directs the Secretary to appoint a Dairy
Board composed of private milk
4
Other stand-alone checkoff producers to administer the Dairy
programs established by Congress which Promotion Program. Id. §§ 4504 (b) &
have been subject to First Amendment (c). The Act provides that every milk
challenges include: Beef Research and producer must pay a mandatory
Information Act of 1976 (“Beef Act”), 7 assessment of 15 cents per
U.S.C. § 2901 et seq. (invalidated by hundredweight of milk sold to finance
Livestock Marketing Ass’n v. U.S. Dep’t the promotional programs and the Dairy
of Agric., 335 F.3d 711 (8th Cir. 2003) Board’s administration of them.
(reh’g den. Oct. 16, 2003)); Pork
Pursuant to the authority provided
Promotion, Research, and Consumer
in 7 U.S.C. § 4503(a), the Secretary
Information Act of 1985 (“Pork Act”), 7
issued an order in March 1984
U.S.C. § 4801 et seq. (invalidated by
establishing the Dairy Board, 7 C.F.R §
Michigan Pork Producers Ass’n, Inc. v.
1150.131, and the Board proceeded to
Veneman, 348 F.3d 157 (6th Cir. 2003));
collect the mandatory assessments from
Mushroom Act, 7 U.S.C. § 6101 et seq.
all milk producers, 7 C.F.R § 1150.152.
(invalidated in 2001 by United Foods,
For the Cochrans, the compelled
533 U.S. at 405). Cf. Glickman, 521
assessments amount to roughly $3,500 to
U.S. at 457 (upholding as constitutional
$4,000 per year.
marketing orders for California tree fruits
promulgated pursuant to the AMAA, 7
U.S.C. § 608c et seq., which included
compelled assessments to fund, among other things, generic advertising).
7
The Dairy Board is composed of Dairy Board and the DMI Board are
commercial milk producers who are composed entirely of private milk
nominated by “eligible associations,” producers and other private parties, and
which are private associations of milk the Dairy Promotion Program is funded
producers that engage in dairy promotion entirely by private milk producers
at the state and regional level. Id. §§ through the compelled assessments. The
1150.133, 1150.273. The primary Dairy Promotion Program website
consideration in determining an explains: “Checkoff programs are funded
organization’s eligibility is “whether its by dairy producers – NOT
membership consists primarily of milk TAXPAYERS. They are not
producers who produce a substantial governmental programs; rather, they are
volume of milk” and whose overriding businesses with governmental
interests lay in the production and oversight.” 5
promotion of fluid milk and other dairy
The Secretary’s oversight
products. Id. § 1150.274(b).
responsibilities pursuant to the Dairy Act
In 1994, the Dairy Board created are conducted by the Agricultural
Dairy Management, Inc. (“DMI”), a Marketing Service (“AMS”), a division
District of Columbia corporation that of the USDA, and are limited to ensuring
now oversees and administers the that the Dairy Promotion Program is in
promotional activities of the Dairy Act. compliance with the Act. See, e.g., 7
DMI is a joint undertaking of the Dairy U.S.C. § 4507(a) (authorizing the
Board and the United Dairy Industry Secretary to terminate an order issued
Association (“UDIA”), which is an under the Act only when she determines
association of state and regional dairy that it “obstructs or does not tend to
promotional programs that are effectuate the declared policy of” the
considered “Qualified Programs” under Act). AM S guidelines explain that “[i]t
the Dairy Act. “Qualified Programs” are is the policy of AMS in carrying out the
local promotional programs, many of oversight responsibility to ensure that
which preexisted the Dairy Act, to which legislative, regulatory, and Department
milk producers may contribute a portion policy requirements are met. It is not the
of the money they would otherwise pay intent to impose constraints on board
in assessments under the Act. See 7 operations beyond these requirements.”
U.S.C. § 4504(g)(4), 7 C.F.R. §§ AMS, Guidelines for AMS Oversight of
1150.152(c), 1150.153. The Act thus Commodity Research and Promotion
requires dairy farmers to pay either the
full 15 cent per hundredweight
assessment to the Dairy Program or part 5
Dairy checkoff Works! – How the
to the Dairy Program and part to a Dairy Checkoff works, available at
Qualified Program that engages in state http://www.dairycheckoff.com/howitworks.
or regional generic advertising. The htm (last visited June 3, 2002 (J.A. at 231)).
8
Programs 1 (1994). The Secretary’s bound together and obligated by statute
oversight functions for the Dairy to market their products according to
Program are funded by the compelled some set of cooperative rules. The
assessments. 7 U.S.C. § 4504(g)(2); 7 district court held that such a cooperative
C.F.R. § 1150.151(b). Moreover, the arrangement exists for dairy producers,
dairy producers, not the government, but we conclude otherwise.
control whether the Dairy Promotion
A.
Program continues via a referendum
process. 7 U.S.C. § 4506(a). The AMAA, 7 U.S.C § 608c,
permits the Secretary to issue marketing
All advertising and promotional
orders that regulate the handling and
programs that are financed by the
sales of various agricultural
compelled assessments under the Dairy
commodities, including milk, in different
Act and created by the Dairy Board and
regions of the country. For milk, the
DM I promote milk as a generic product.
marketing orders establish a
7 C.F.R. § 1150.114. Among
classification system and set minimum
advertising campaigns financed by the
prices that handlers must pay in the
Dairy Promotion Program are “Got milk?
regions in which the orders apply. See 7
®” and “Ahh, the power of cheese.”
U.S.C. § 608c(5); 7 C.F.R. § 1000.1 et
seq. The AM AA applies only to
“handlers”6 of the covered commodities.
III.
7 U.S.C. §§ 608c(1) & (5)(A).
In addition to the Dairy Act, the “Producers,” such as dairy farmers in
dairy industry is subject to a patchwork general, and Joseph and Brenda Cochran
of federal and state regulatory laws. The in particular, are specifically exempted
district court noted four federal laws in from the application of marketing orders.
particular that it deemed relevant to this Id. § 608c(13)(B) (stating that no
case: (1) the Agricultural Marketing marketing order “shall be applicable to
Agreement Act of 1937 (“AM AA”), 7 any producer in his capacity as a
U.S.C. § 608c et seq.; (2) the Agriculture producer”).
Act of 1949, 7 U.S.C. § 1446; (3) import
Although milk marketing orders
control regulations under 19 U.S.C. §
restrict the decisions of dairy handlers,
1202; and (4) the Capper-Volstead Act, 7
they do not interfere with the decisions
U.S.C. § 291.
of dairy producers, such as the Cochrans,
An examination of the provisions
of these statutes is crucial to determine
6
whether these legislative acts, in A handler is a person who
conjunction with the Dairy Act, bring the purchases milk from a producer in an
case at bar within the rubric of Glickman unprocessed form for the purpose of
– i.e., requiring that milk producers are processing it.
9
with regard to how much milk to the Cochrans, however, are not covered
produce, sell or whether they must sell by the Agricultural Act and are not
milk at all to dairy handlers. See id. § permitted to sell their product to the
608c(5).7 At least 25 percent of the milk government under the price support
sold in the United States is sold outside program.
of federal milk marketing orders. The
C.
Cochrans are able to and do sell much of
their milk outside any milk marketing Similarly, the import control
order. regulations under Chapter 4 of the
Harmonized Tariff Schedule of the
B.
United States, 19 U.S.C. § 1202, subject
The Agricultural Act of 1949, 7 a multitude of commodities and products
U.S.C. § 1446, establishes a price to annual import quotas. Although
support program wherein manufacturers certain dairy products are included –
and processors of cheese, nonfat dry milk namely butter, dry milk and cheese –
and butter can sell those products to the fluid milk is not. See 7 C.F.R. Pt. 6,
federal government as buyer of last Apps. 1, 2, 3.
resort. Producers of fluid milk, such as
D.
7
Finally, the Capper-Volstead Act,
Milk marketing orders under the
7 U.S.C. § 291, permits producers of
AMAA are implemented on a regional
agricultural products – including milk,
basis. See 7 U.S.C. § 608c(11). Not all
mushrooms and others – to enter into
parts of the country are covered, and
manufacturing and marketing
some states – including California,
cooperatives without fear of violating
Virginia, Maine and M ontana – are
antitrust laws. It does not, however,
outside the territory of any milk
require producers to enter into such
marketing order. Portions of
cooperatives, as federal law expressly
Pennsylvania fall within two different
protects producers’ freedom not to join
milk marketing regions, the Northeast
any cooperative. See Agricultural Fair
Area and the M ideast Area. See 7 C.F.R.
Practices Act of 1967, 7 U.S.C. § 2301 et
§§ 1001.1, 1033.1. Certain portions of
seq.; Michigan Canners & Freezers
the state, however, including where the
Ass’n, Inc. v. Agric. Mktg. & Bargaining
Cochrans are located, fall outside of any
Bd., 467 U.S. 461, 477-478 (1984). The
federal milk marketing order. The effect
Cochrans do not belong to any
of the AMAA provisions is that any
cooperatives protected by the antitrust
particular producer’s milk is subject to a
exemption created by the Capper-
marketing order only if the producer
Volstead Act.
chooses to sell to a regulated handler in
an area covered by a marketing order. E.
See id. §§ 1001.13, 1033.13.
10
Considering the foregoing expressed when [the government] is the
provisions of the Dairy Act and other speaker or when [the government] enlists
statutes governing the dairy industry, we private entities to convey its own
now turn to the First Amendment issues message.” Rosenberger v. Rector &
that constitute the heart of this appeal.8 Visitors of the Univ. of Virginia, 515
U.S. 819, 833 (1995).
The Court has not decided
IV.
whether speech generated under
We must first consider whether commodity promotion laws such as the
the compelled assessments generated Dairy Act constitutes government speech
under the Dairy Act constitute private or and is thereby immune from First
government speech. Although the Amendment scrutiny.9 But in Frame, this
district court did not address this issue, court did meet the issue. 885 F.2d at
the Government contended before the 1132-1133.
district court that the expressions
In line with our sister Courts of
generated under the Dairy Act constitute
Appeals in Michigan Pork Producers
government speech. Therefore, the issue
Ass’n, Inc. v. Veneman, 348 F.3d 157,
is subject to our review.
161-162 (6th Cir. 2003) and Livestock
The First Amendment prohibits Marketing Ass’n v. U.S. Dep’t of Agric.,
the government from regulating private 335 F.3d 711, 720 (8th Cir. 2003), we
speech based on its content, but the Court held that the Beef Promotion Program
has “permitted the government to was not government speech because it
regulate the content of what is or is not required only beef producers to fund it
and it attributed the advertising under the
8
program to the beef producers. Frame,
The United States District Court
885 F.2d at 1132-1133. Recognizing that
for the Middle District of Pennsylvania
the Beef Promotion Program directed the
had jurisdiction pursuant to 28 U.S.C. §
1331 based on the Cochrans’ First
9
Amendment claim. We have jurisdiction The two decisions of the Court
in this timely appeal pursuant to 28 involving commodity promotion
U.S.C. §§ 1291. We review de novo the programs do not address the issue of
constitutionality of an Act of Congress. government speech. In Glickman, the
Dyszel v. Marks, 6 F.3d 116, 123 (3d Secretary of Agriculture waived the issue
Cir. 1993). Similarly, our review of the by not pursuing it before the Supreme
district court's granting of judgment on Court. 521 U.S. at 482 n.2 (Souter, J.,
the pleadings and summary judgment is dissenting). In United Foods, the Court
plenary. Anker Energy Corp. v. refused to address the issue because the
Consolidation Coal Co., 177 F.3d 161, government failed to raise it before the
169 (3d Cir. 1999). Court of Appeals. 533 U.S. at 416-417.
11
Secretary to appoint all Cattlemen Board Secretary’s supervisory responsibilities
members and approve all budgets, plans, are not sufficient to transform the dairy
contracts and projects entered into by the industry’s self-help program into
Board, this court nevertheless concluded “government speech.” On the dairy
that “[t]he Secretary’s extensive checkoff website, the government itself
supervision . . . does not transform this describes the Dairy Promotion Program
self-help program for the beef industry as a non-governmental program,
into ‘government speech.’” We financed and directed by dairy farmers.
explained:
Although this court’s First
The Cattlemen’s Board seems to Amendment discussion and ultimate
be an entity “representative of one holding in Frame have been abrogated by
segment of the population, with Glickman and United Foods, none of the
certain common interests.” Court’s subsequent decisions regarding
Members of the Cattlemen’s “government speech” undermine our
Board and the Operating analysis of that issue in Frame.10
Committee, though appointed by
the Secretary, are not government
officials, but rather, individuals 10
Notwithstanding the
from the private sector. The pool Government’s assertions to the contrary,
of nominees from which the we are not convinced that any decisions
Secretary selects Board members, rendered by the Court in the years
moreover, are determined by following our decision in Frame require
private beef industry us to cast aside the government speech
organizations from the various analysis we performed in Frame. See
states. Furthermore, the State Legal Servs. Corp. v. Velazquez, 531
organizations eligible to U.S. 533 (2001) (concluding that
participate in Board nominations restrictions placed on the private speech
are those that “have a history of of a lawyer receiving government
stability and permanency,” and funding from the Legal Services
whose “primary or overriding Corporation were unconstitutional); Bd.
purpose is to promote the of Regents of the Univ. of Wis. Sys. v.
economic welfare of cattle Southworth, 529 U.S. 217 (2000) (stating
producers.” in dicta, in a case where the government
Id. at 1133 (quoting 7 U.S.C. § affirmatively disavowed any connection
2905(b)(3) & (4)). The government’s to the speech involved, that a
role in the Dairy Promotion Program is in government speech analysis might apply
all material respects the same as it was in if a state university used general tuition
the Beef Promotion Program, and under money to fund speech attributed to the
the precedent established in Frame, the school or its administrators); Lebron v.
Nat’l R.R. Passenger Corp., 513 U.S. 374
12
Accordingly, we conclude that this is a expressive associations with which they
private speech case, and thus is not disagree. See United Foods, 533 U.S. at
immune from First Amendment scrutiny. 411. “First Amendment values are at
serious risk if the government can
V.
compel a particular citizen, or a discrete
The teachings of United Foods group of citizens, to pay special subsidies
require us to decide whether the dairy for speech on the side that it favors . . . .
producers are “bound together and As a consequence, the compelled funding
required by the statute to market their for the advertising must pass First
products according to cooperative Amendment scrutiny.” Id. The
rules[,]” 533 U.S. at 412, for purposes individual’s disagreement can be minor,
other than advertising, or speech. That as “[t]he general rule is that the speaker
is our next task. and the audience, not the government,
assess the value of the information
The Cochrans contend that the
presented.” Id. (quoting Edenfield v.
Dairy Act violates their First Amendment
Fane, 507 U.S. 761, 767 (1993)). When,
free speech and association rights by
however, regulation compelling funding
compelling them to subsidize generic
for speech is ancillary to a broader
advertising that promotes milk produced
collective enterprise that otherwise
by methods they view as wasteful and
restricts the individual’s market
harmful to the environment.
autonomy, it is considered “economic
The First Amendment protects the regulation,” which enjoys a “strong
right to refrain from speaking and the presumption of validity” when facing a
right to refrain from association. See, First Amendment challenge. See
e.g., Wooley, 430 U.S. at 714. Glickman, 521 U.S. at 477.
Moreover, the government may not
We conclude that in upholding as
compel individuals to fund speech or
constitutional the compelled subsidies
under the Dairy Act, the district court
(1995) (holding that Amtrak is a misapplied Glickman and misconstrued
government actor for First Amendment the effect of the “entire regulatory
purposes because it was created by scheme applicable to milk producers . . .
statute to further government objectives .” (District Court Op. at 15 n. 5.) The
and the government maintained Court in United Foods made clear that
substantial control over its daily Glickman applied only in circumstances
operations); Rust v. Sullivan, 511 U.S. similar to Abood and Keller – in which
173 (1991) (concluding that the individuals are “bound together” in a
government can prevent private doctors collective enterprise, such as a union or
at family planning clinics that receive an integrated state bar, and the compelled
federal funding from providing abortion subsidies are the “logical concomitant of
counseling). a valid scheme of economic regulation.”
13
533 U.S. at 412. scale dairy producers, the Cochrans are
exempted from the regional marketing
The provisions of the Dairy Act
orders under the AMAA and have chosen
do not require milk producers to
not to enter into manufacturing and
participate in a collective enterprise and
marketing cooperatives. They, and they
do not compel them to market their
alone, determine how much milk to
product, fluid milk, according to any
produce, how to sell and market it and to
rules of a cooperative. Although the
whom it will be sold. Nevertheless under
dairy industry is “regulated” in the sense
the Dairy Act they are compelled to pay
that it is subject to a patchwork of state
assessments to subsidize generic dairy
and federal laws, there is no association
advertising, a form of speech with which
that all milk producers must join that
they are in total disagreement. Cf.
would make the entire industry
Glickman, 521 U.S. at 471 (noting that
analogous to a union, an integrated bar or
“none of the generic advertising conveys
the collective enterprise at issue in
any message with which respondents
Glickman.
disagree”).
The Dairy Act is a free-standing
Furthermore, as the Court in
promotional program that applies to all
United Foods determined that speech is
dairy producers regardless of whether
the principal purpose of the Mushroom
they are subject to marketing orders or
Act, so it is of the Dairy Act. 11 Indeed,
any other dairy regulations. It is not
ancillary to any collective enterprise or
compelled association with a non-speech
11
purpose because there is no such Congress’ declared policy of the
enterprise or association for milk that Mushroom Act was
encompasses all dairy producers. Indeed,
the AMAA provision for milk marketing that it is in the public interest to
orders, which preexisted the Dairy Act, authorize the establishment,
authorizes the Secretary and marketing through the exercise of the powers
administrators to create dairy provided in this chapter, of an
promotional programs that literally orderly procedure for developing,
would be ancillary to the regulatory financing through adequate
aspects of the milk marketing orders. assessments on mushrooms
See 7 U.S.C. 608c(5)(I). Congress chose produced domestically or
not to utilize this precise provision of the imported into the United States,
AMAA, however, and instead adopted an and carrying out, an effective,
entirely separate program which does not continuous, and coordinated
operate in concert with any collective program of promotion, research,
aspect of any milk marketing order. and consumer and industry
information designed to – (1)
Moreover, as independent small- strengthen the mushroom
14
“almost all of the funds collected under Amendment free speech and
the mandatory assessments are for one associational rights issue. But our
purpose: generic advertising.” United determination that the Act’s compelled
Foods, 533 U.S. at 412. In United assessments for generic advertising
Foods, the Court made clear that implicate the Cochrans’ First
compelled subsidies may not be upheld Amendment rights does not end our
where they are only germane to a inquiry. As this court held in Frame,
program whose “principal object is “[t]he rights of free speech and
speech itself.” Id. at 415. association are not absolute. Thus, we
must next identify the proper standard for
We conclude, therefore, that being
evaluating whether the statute . . .
compelled to fund advertising pursuant
nevertheless passes constitutional
to the Dairy Act raises a First
muster.” 885 F.2d at 1133.12
industry’s position in the
12
marketplace; (2) maintain and Upon concluding that milk
expand existing markets and uses producers are regulated to a similar
for mushrooms; and (3) develop degree as the California tree fruit
new markets and uses for growers in Glickman, the district court
mushrooms. applied a three-part test set forth by the
Supreme Court in Glickman: (1) whether
7 U.S.C. § 6101(b). Congress’ declared the Act imposes a restraint on the
purpose for the Dairy Act is freedom to communicate; (b) whether the
Act compels any person to engage in any
that it is in the public interest to actual or symbolic speech; (c) whether
authorize the establishment . . . of the Act compels dairy producers to
an orderly procedure for financing endorse or finance any political or
(through assessments on all milk ideological views. (District Court Op. at
produced in the United States for 16-18.) This test, however, is
commercial use and on imported inappropriate because, like the Supreme
dairy products) and carrying out a Court in United Foods, we have
coordinated program of promotion concluded that the Dairy Act is not a
designed to strengthen the dairy species of economic regulation, as it is
industry’s position in the not ancillary to a more comprehensive
marketplace and to maintain and program restricting the marketing
expand domestic and foreign autonomy of dairy farmers. In United
markets and uses for fluid milk Foods the Court did not apply this three-
and dairy products. part test. Nor do we.
7 U.S.C. § 4501(b).
15
VI. be designed carefully to achieve the
State’s goal.” 447 U.S. at 564.
This case is properly characterized
Commercial speech is “expression
as a compelled commercial speech case.
related solely to the economic interests of
See United Foods, 533 U.S. at 410;
the speaker and its audience.” Id. at 561.
Frame, 885 F.2d at 1146 (Sloviter, J.,
dissenting). The Supreme Court, But the Court has left open the
however, has left unresolved the standard question of whether Central Hudson’s
for determining the validity of laws more relaxed First Amendment test
compelling commercial speech, and the applies to cases involving compelled
circuit courts are divided on the issue. commercial speech. In United Foods the
There are at least four variations in the Court stepped back from addressing the
judiciary’s cumulative experience. One issue in ipsis verbis, explaining: “the
is the more lenient standard applied to Government itself does not rely upon
commercial speech cases. See Central Central Hudson to challenge the Court of
Hudson Gas & Elec. Corp. v. Pub. Serv. Appeals’ decision, . . . and we therefore
Comm’n, 447 U.S. 557, 564 (1980). do not consider whether the
Another is the “germaneness” test of Government’s interest could be
compelled speech cases. See, e.g., considered substantial for purposes of the
Abood, 431 U.S. at 235-236. Still Central Hudson test.” 533 U.S. at 410.
another is an adaptation of the Nevertheless, in the earlier case of
commercial speech standard. See Glickman, the Court questioned the
Livestock Marketing, 335 F.3d at 722- application of the commercial speech test
723. And, in Frame, a pre-Glickman and to compelled speech cases:
pre-United Foods case, this court applied
The Court of Appeals fails to
the stringent level of scrutiny for
explain why the Central Hudson
associational rights cases. 885 F.2d at
test, which involved a restriction
1134. We now summarize the various
on commercial speech, should
standards.
govern a case involving the
A. compelled funding of speech.
Given the fact that the Court of
In Central Hudson, the Supreme
Appeals relied on Abood for the
Court held that to evaluate the
proposition that the program
constitutionality of regulatory restrictions
implicates the First Amendment, it
on commercial speech the Constitution
is difficult to understand why the
requires only intermediate scrutiny –
Court of Appeals did not apply
namely, that (1) the state must “assert a
Abood’s “germaneness” test.
substantial government interest”; (2) “the
regulatory technique must be in 521 U.S. at 474 n. 18.
proportion to that interest”; and (3) the
Indeed, in United Foods,
incursion on commercial speech “must
16
notwithstanding its specific disclaimer under the Dairy Act are germane to
regarding Central Hudson, the Court nothing but the speech itself. “[A]lmost
seemingly applied the “germaneness” all of the funds collected under the
test: mandatory assessments are for one
purpose: generic advertising.” Id. at 412.
The only program the
It would thus seem that the Dairy Act
Government contends the
would not survive Abood’s germaneness
compelled contributions serve is
test.
the very advertising scheme in
question. Were it sufficient to say Other courts have applied the
speech is germane to itself, the germaneness test to cases involving
limits observed in Abood and compelled assessments pursuant to
Keller would be empty of promotional programs and have rejected
meaning and significance. The the application of Central Hudson. See,
cooperative marketing structure e.g., Michigan Pork, 348 F.3d at 163
relied upon by a majority of the (noting that “[e]ven assuming that the
Court in Glickman to sustain an advertising funded by the [Pork] Act is
ancillary assessment finds no indeed commercial speech, the more
corollary here; the expression lenient standard of review applied to
respondent is required to support limits on commercial speech has never
is not germane to a purpose been applied to speech – commercial or
related to an association otherwise – that is compelled”); In re
independent from the speech Washington State Apple Adver.
itself; and the rationale of Abood Comm’n, 257 F. Supp. 2d 1274, 1287
extends to the party who objects (E.D. Wash. 2003) (concluding that
to the compelled support for this “[b]ecause the Commission’s
speech. For these and other assessments do not restrict speech, it is
reasons we have set forth, the inappropriate to apply the Central
assessments are not permitted Hudson test for restrictions on
under the First Amendment. commercial speech”).
533 U.S. at 415-416 (emphasis added). In Livestock Marketing, however,
the Eighth Circuit concluded that an
As we previously explained, the
adaptation of the Central Hudson test
purpose of the Dairy Act is in all material
applied, explaining that “Central Hudson
respects the same as that of the
and the case at bar both involve
Mushroom Act at issue in United Foods,
government interference with private
and the Dairy Act is not ancillary to a
speech in a commercial context.” 335
broader cooperative marketing regime
F.3d at 722. All the same, the court
like the fruit tree marketing orders at
concluded that the Beef Act did not
issue in Glickman. The compelled
survive the intermediate scrutiny of
assessments for generic dairy advertising
17
Central Hudson. Id. at 725-726. Relying Court in evaluating the
on the reasoning set forth in United permissibility of regulation of
Foods, the court determined that the beef commercial speech [in Central
checkoff program is in all material Hudson] . . . . While the
respects identical to the mushroom government has a general interest
checkoff program, and concluded that in the health of the beef industry,
“the government’s interest in protecting it does not follow that the
the welfare of the beef industry by government has a substantial
compelling all beef producers and interest in compelling the beef
importers to pay for generic beef industry to make and support such
advertising is not sufficiently substantial a promotion campaign. Instead, . .
to justify the infringement on appellees’ . the messages represent the
First Amendment free speech right.” Id. economic interests of one segment
of the population . . . .
Finally, in Frame, which was
decided before the teachings of both Id. at 1146-1147 (Sloviter, J., dissenting)
Glickman and United Foods, this court (citations and internal quotations
applied the stringent associational rights omitted).
standard but nevertheless upheld the
As in Frame, the Government here
constitutionality of the Beef Act, 7
argues that it has a sufficient interest in
U.S.C. § 2901 et seq. Back in 1989, this
increasing the demand for an agricultural
court concluded that the government’s
product. Moreover, the Government
interest in “maintaining and expanding
contends that it has an interest in
beef markets proves . . . compelling[,]”
decreasing its obligation to purchase
and “[m]aintenance of the beef industry
dairy products under the price support
ensures preservation of the American
program, 7 U.S.C § 1446. We previously
cattlemen’s traditional way of life.”
have emphasized, however, that the
Frame, 885 F.2d at 1134-1135 (citations
Court’s subsequent holding in United
omitted).
Foods that clarified and limited the
Judge Sloviter, however, teachings of Glickman, cut away the
dissented on this issue in Frame: underpinning of this court’s analysis in
Frame. United Foods makes clear that
I doubt that the type of compelled
the government may not compel
speech at issue here can be
individuals to support an advertising
justified on any basis.
program for the sole purpose of
Nonetheless, I do not reach the
increasing demand for that product. 533
majority’s stringent associational
U.S. at 415. In United Foods, the Court
rights standard because I believe
concluded that the Mushroom Act’s
that no justification can be found,
compelled subsidies would be
even under the less exacting
unconstitutional even under the lesser
criteria adopted by the Supreme
18
scrutiny accorded to commercial speech. B.
Id. at 410.
In light of the reluctance of the
Although the Government’s Supreme Court in United Foods to enter
contention that it has a substantial the controversy over the applicable
interest in decreasing its obligation under scrutiny for compelled commercial
the dairy price support program is speech cases, however, we will follow
somewhat unique from the government suit. “[W]e find no basis under either
interest asserted in United Foods, this Glickman or our other precedents to
interest is undermined by the fact that as sustain the compelled assessments sought
a stand-alone statute, the Dairy Act does in this case.” 533 U.S. at 410.13
not operate in conjunction with the price
The compelled assessments for
support program. Indeed, producers of
generic dairy advertising under the Dairy
liquid milk such as the Cochrans are not
Act relate to speech and only to speech.
covered by the support program.
Indeed, “almost all of the funds collected
Moreover, reductions in the
under the mandatory assessments are for
government’s obligations under the price
one purpose: generic advertising.” Id. at
support program are insignificant to the
412.
Dairy Promotion Program’s existence, as
whether the compelled assessments Measured by any degree of
continue is controlled by the dairy scrutiny set forth in the foregoing
producers via the referendum process. 7 discussion, we conclude that this case
U.S.C. § 4506(a). runs on all fours with the teachings and
holding of United Foods, and
We conclude, therefore, that the
accordingly hold that the Dairy
government’s interest in promoting the
Promotion Stabilization Act of 1983 does
dairy industry is not sufficiently
not survive the First Amendment
substantial to justify the infringement on
challenge lodged by Appellants Joseph
the Cochran’s First Amendment free
and Brenda Cochran. The district court
speech and association rights. As Judge
erred in sustaining the constitutionality
Sloviter suggested in her dissent in
of the Dairy Act on the basis of
Frame, promotional programs such as the
Glickman.
Dairy Act seem to really be special
interest legislation on behalf of the *****
industry’s interest more so than the
government’s. We believe that the
13
Supreme Court reached the same We reach this conclusion
conclusion by ruling in United Foods that whether accepting the standard explicitly
the compelled assessments pursuant to expressed in Frame or deciding that in
the Mushroom Act are not permitted by view of the Court’s discussion in United
the First Amendment. Foods, that standard is not longer
controlling.
19
In sum, we conclude that the at Part VI-A. Twice – in both Glickman
generic advertising pursuant to the Dairy and United Foods – the Supreme Court has
Promotion Stabilization Act of 1983 does questioned the need for engaging in a
not constitute government speech and is Central Hudson analysis.14 And, I think it
therefore subject to First Amendment
scrutiny. We hold that the Dairy Act
14
violates the Cochrans’ First Amendment The Court has not treated these
free speech and associational rights. cases as involving a discrete commercial
speech issue, instead indicating that “[t]he
Although the dairy industry may be
question is whether the government may
subject to a labyrinth of federal
underwrite and sponsor speech with a
regulation, the Dairy Act is a stand-alone certain viewpoint using special subsidies
law and the compelled assessments for exacted from a designated class of persons,
generic dairy advertising are not germane some of whom object to the idea being
to a larger regulatory purpose other than advanced.” United Foods, 533 U.S. at 410;
the speech itself. see also id. (stating that, even if commercial
speech is less protected than other speech,
The judgment of the district court
there is “no basis under either Glickman or
sustaining the constitutionality of the our other precedents to sustain the
Dairy Promotion Stabilization Act of compelled assessments,” but refusing to
1983 will be reversed and the proceedings consider “whether the Government’s interest
remanded with a direction to enter a could be considered substantial for purposes
decree in favor of Appellants in of the Central Hudson test”); Glickman, 521
accordance with the foregoing. U.S. at 474 & n.18 (noting that it was “error
for the [Ninth Circuit] to rely on Central
Hudson for the purpose of testing the
RENDELL, Circuit Judge, concurring. constitutionality of market order
assessments for promotional advertising,”
and stating that the Ninth Circuit “fails to
explain why the Central Hudson test, which
I join in our opinion and judgment involved a restriction on commercial speech,
but write separately to register my view should govern a case involving the
that, having found that the assessments do compelled funding of speech”). In fact, in
not pass muster under the Supreme Court’s United Foods the Court appears to explicitly
analysis in United Foods, and, having noted endorse the applicability of the
at the end of Pat IV that the compelled Abood/Keller germaneness test: “It is true
subsidies were assessed to support a that the party who protests the assessment
program whose principal object was speech here is required simply to support speech by
itself, we need not engage in the exercise of others, not to utter the speech itself. We
determining the “standard” regarding the conclude, however, that the mandated
support is contrary to the First Amendment
extent of the government’s interest for
principles set forth in cases involving
purposes of a commercial speech analysis
expression by groups which include persons
under Central Hudson, as the opinion does who object to the speech, but who,
20
unnecessary to apply Central Hudson in Second, is the assessment regulation
light of the Court’s analysis in United related to and in furtherance of other non-
Foods.15 speech purposes, carrying out other aspects
to further other economic, societal, or
In United Foods the Court
governmental goals? Id. at 415. Even if
distinguished the situation it faced from the
the answer to the first question is “no,” the
one it considered in Glickman by
assessment might nonetheless be permitted
examining the following question: Is the
if it is not only related to speech. This
challenged assessment part of a “broader
second inquiry could signal consideration
regulatory system” that does not have
of “germaneness” if, in fact, other goals
speech as its primary object. 533 U.S. at
were implicated. But here, we answered
415. There appear to be two parts to this
“no” to both questions: we decided that the
basic inquiry. First, are the plaintiffs part
Cochrans did not surrender their freedom
of a group that is “bound together and
to make independent competitive choices
required . . . to market their products
to any collective enterprise, and we
according to cooperative rules?” Id. at 412.
concluded that speech was the only
purpose of the Dairy Act. Thus, it was
purely “compelled speech,” forbidden by
nevertheless, must remain members of the United Foods under any level of scrutiny.
group by law or necessity.” 533 U.S. at 413
533 U.S. at 410. In fact, after discussing
(citing Abood and Keller).
the various standards potentially applicable
15
The Sixth Circuit, in Michigan Pork here, Judge Aldisert clearly states in the
Producers Ass’n, Inc. v. Veneman, 348 F.3d ensuing Part VI-B that under any level of
157 (6th Cir. 2003), also rejected the scrutiny, the assessments for speech only
application of the Central Hudson test to an do not pass constitutional muster given
assessment created by a similar promotional United Foods. The analysis in Part VI-A
program. I find that court’s comments on this regarding the proper level of scrutiny is
matter to be instructive: “[W]e find therefore unnecessary, and, I believe,
inapplicable to this case the relaxed scrutiny dicta.
of commercial speech analysis provided for
by Central Hudson, and relied upon by
Appellants. The Pork Act does not directly
limit the ability of pork producers to express
a message; it compels them to express a
message with which they do not agree. Even
assuming that the advertising funded by the
Act is indeed commercial speech, the more
lenient standard of review applied to limits
on commercial speech has never been applied
to speech – commercial or otherwise – that is
compelled. It is one thing to force someone
to close her mouth; it is quite another to force
her to become a mouthpiece.” Id. at 163
(citation omitted).