Paramount Land Co. v. California Pistachio Commission

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PARAMOUNT LAND COMPANY LP, a 

California limited partnership;

PARAMOUNT ORCHARDS PARTNERS

VI LLC, a Delaware limited

liability company; WV

ACQUISITION CORPORATION, a

Delaware corporation; PARAMOUNT

FARMS INC.,

Plaintiffs-Appellees,

v.

No. 06-55054

CALIFORNIA PISTACHIO COMMISSION,

D.C. No.

a California corporation,

Defendant-Appellant,  CV-05-07156-

MMM

v.

OPINION

WILLIAM H KIMBALL, an

individual; CENTRAL GREEN

COMPANY LP, a California limited

partnership; JACK BREWER, an

individual; YOSEMITE RETIREMENT

CAP GROWTH FUND; LOWE

PISTACHIO RANCH LLC, a

California limited liability

company; STEVE YOST, an

individual;



7019

7020 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

JOHN J GUDEBSKI, an individual; 

ERICH STEGELMANN, an individual;

JAMES NIELSEN, an individual;

ROBERT MANLOVE, an individual;

HALEY PISTCACHIO RANCH; DR.

GRACE BLAIR, an individual; KAMM

SOUTH LLC, a limited liability

company; REINA PROPERTIES;

SAMAR PISTACHIO RANCH LP, a

California limited partnership;

CAPRI PISTACHIO RANCH LP, a

California limited partnership;

PALAU PISTACHIO RANCH LP, a

California limited partnership;

TIMOR PISTACHIO RANCH LP, a

California limited liability

partnership; GARY HAGEMAN, an 

individual; COULTHARD RANCH;

FLOYD HARLAN, an individual; DR.

KENNETH D HIRSCH, an individual;

HARLAN RANCH CO; BUDKE FARMS

INC; MARVIN R YOST, Trustee on

behalf of Marvin R Yost Trust;

NAGATANI FARMS LP, a limited

partnership; AMIN ORCHARDS CO;

ALDO PISTACHIO, Trustee on behalf

of Pistachio Lorraine Trust; DR.

M W SULLIYAN, an individual;

ROBERT A YOST, an individual;

MOFFETT CREEK RANCH

PARTNERSHIP; PENDOLA TRUCKEE

VENTURE; SANTA FE ORCHARDS

PARTNERSHIP; SEI-SAW RANCHO;



PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7021

JAMES BULLARD, an individual; 

CATHERINE BULLARD, an individual;

MCDEVITT RANCH ETHEL KIMBALL,

an individual; FLORENCE THOM, an

individual; RON JUDSON, an

individual; BARBARA JUDSON, an

individual; VAN ALSBERG SPENCE;

BEATRICE REED, an individual;

SANDRA NIELSEN, an individual;

ROBERT MORRIS, an individual;

DAN EWELL, an individual; SHEILA

MARTIN, an individual; MADERA

PISTACHIO RANCH #2A; MADERA

PISTACHIO RANCH #2B; MADERA

PISTACHIO RANCH #2C; MADERA 

PISTACHIO RANCH #3; MD CRAIG

CAMPBELL, an individual;

PROFESSIONAL FARMING CAPITAL

PISTACHIO GROVE; PETER J HINTON,

an individual; CITRUS RANCHES

LLP, a limited liability company;

LEE CRUMBLEY PISTACHIOS; FRANK J

BELLINO, an individual; MILTON

GREENSTEIN, an individual; HARRIET

CHAN-MEYERS, an individual and

as Administrator on behalf of

Kong Bypass Trust; FOREST V

YOUNG, an individual;



7022 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

STEPHEN LEUNG, an individual; RV 

DAIRY; MANNING AVE PISTACHIOS;

JEFF DICKEY, an individual; CLOYD

R CHAMBERLAIN, an individual;

JUDY L MUELLER, an individual;

THOMAS L GRIGGS, an individual;

MURRELL RANCH; KC FARMS INC.,

a corporation; KEITH HANSEN

RANCH; PLANADA LLC, a limited

liability company; FOWLER/PARLIER

FRAMS; HOWARD SILEN, an

individual; SHIRLEY CONAWAY, an

individual; ARTHUR IMIRIAN, an

individual; DONALD E BONANDER,

an individual; ROBERT LANE, an

individual; PRRISIO BROS; GLEN

KREIDER; an individual;

GURCHARIAN S SRA, an individual; 

JOHNNY LAU, an individual; PAUL

GEORGE SOBAJE, an individual;

QUIST FRAMS; RICHARD C WYER, ;

DOUG CARMAN, an individual;

FIRST HARVEST PISTACHIO LP, a

limited partnership; GOLDEN

PISTACHIO GROVES LP, a limited

partnership; MADERA RANCH

COMPANY LP, a limited

partnership; SAN JOAQUIN GROVES;

MULTI CROP PARTNERS LP, a

limited partnership; SHARON

PISTACHIO FARMS II; SHARON

PISTACHIO PARTNERS III; DURHAM

GROWERS LP, a limited

partnership; BERENDA FARMS LP, a

limited partnership;



PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7023

SIERRA VIEW PISTACHIO FARMS LP, 

a limited partnership; GARY BESS,

an individual; MAIN RANCH LP, a

limited partnership; EARMARK

ENTERPRISE INC; ANNE M BUCK, an

individual; JANET L SMITH, Trustee

on behalf of the Smith Family

Trust; RICHARD JOHNSON, an

individual; CLYDE DAVIS, an

individual; APACHE GROVE LAND

PROGRAM 1970; APACHE GROVE

LAND PROGRAM 1971; ERIK GIESE,

an individual; TOM BALES, an

individual; J ELLSWORTH OSBORNE,

an individual; KOSAREFF FARMS;

MD EUGENE F GULISH, an

individual; HERBERT SINGER;

APACHE GROVE LAND PROGRAM 

1972; YOSEMITE RANCH; JOHN M

KONG, an individual; SINGER

PROPERTIES; MD ROBERT GWYAN,

an individual; ALLEN F SCHWEICH,

an individual; HAI-ROU CHU, an

individual; CHUU-CHYAN CHU, an

individual; JAY TAYLOR, an

individual; ROBERT MONTGOMERY,

Trustee on behalf of Robert L and

Joan S Montgomery Family Trust;

ROBERT MONTGOMERY, an

individual; CONCENTRIC ENTERPRISE

INC, a Nevada corporation; GARY

STEIFAVTER, an individual; DON

PARISIO, an individual; BARBARA

PARISIO, in individual; AGGI

OSCHIN, an individual;



7024 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

DOWMAR FAMILY PARTNERSHIP; A 

IAFRATI FARMS; ANTHONY IAFRATI,

an individual; GERARDO OROZCO,

an individual; ROBERTS RANCH; A

IAFRATI FARMS LP; GREGORY

WATTS, an individual; RORY

WATTS, an individual; PAUL M

WATTS, an individual; SNOWDEN ‡ 

BOYLE JR., an individual; TED

BEAR, an individual; WAN HSI

PAN, an individual; J PATRICK

ROONEY, an individual; LASH

FARMS LLP, a limited liability

company,

Plaintiff-Intervenors-Appellees.



Appeal from the United States District Court

for the Central District of California

Margaret M. Morrow, District Judge, Presiding

Argued and Submitted

September 11, 2006—Pasadena, California

Filed June 8, 2007

Before: Cynthia Holcomb Hall, M. Margaret McKeown, and

Kim McLane Wardlaw, Circuit Judges.

Opinion by Judge McKeown

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7027

COUNSEL

Seth P. Waxman, Randolph D. Moss, Neil J. King, and Todd

Zubler, Wilmer Cutler Pickering Hale and Dorr LLP, Wash-

ington, DC, and Jan L. Kahn, George Soares, Rissa A. Stuart,

Kahn, Soares & Conway, LLP, Hanford, California, for

Appellant.

Rex S. Heinke, Michael C. Small, and Edward P. Lazarus,

Akin Gump Strauss Hauer & Feld LLP, Los Angeles, Califor-

nia, and Brian C. Leighton, Law Offices of Brain C. Leighton,

Clovis, California, for appellees Paramount Land Company

and affiliated entities.

Andrew S. Clare and Scott Lidman, Loeb and Loeb, L.L.P.,

Los Angeles, California, for appellees Madera Pistachio

Ranch #2 and affiliated entities.

7028 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

OPINION

McKEOWN, Circuit Judge:

In this appeal we consider whether a statutory scheme com-

pelling California pistachio growers to fund generic advertis-

ing through the California Pistachio Commission (“Pistachio

Commission”) violates the First Amendment. More specifi-

cally, we address whether this generic advertising is “the

Government’s own speech and therefore is exempt from First

Amendment scrutiny” under the Supreme Court’s analysis in

Johanns v. Livestock Marketing Association, 544 U.S. 550,

553 (2005).

A group of pistachio growers, Paramount Land Company,

L.P., Paramount Orchards Partners VI LLC, WV Acquisition

Corporation, and Paramount Farms, Inc., and intervenors Wil-

liam Koch and Donald Quist (collectively “Paramount”),

challenge the marketing and promotional activities of the Pis-

tachio Commission. Paramount argues that the annual subsi-

dies mandated by the California Pistachio Act of 1980 (the

“Pistachio Act”), Cal. Food. & Agric. Code §§ 69001-69114,

and administered by the Pistachio Commission constitute

compelled speech in violation of the First Amendment.

This issue arises in the context of the Pistachio Commis-

sion’s appeal of a preliminary injunction forbidding it from

collecting and using the challenged assessments until the liti-

gation is resolved on the merits. Because it is not apparent on

this record that Paramount can meet its burden to establish a

First Amendment violation, Paramount has not demonstrated

a likelihood of success on the merits. Although Paramount has

raised the specter of irreparable injury by bringing a colorable

First Amendment claim, its showing with respect to the merits

is insufficient to sustain an injunction. We reverse the judg-

ment of the district court and vacate the injunction.

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7029

BACKGROUND

I. STATE REGULATION OF PISTACHIOS—THE PISTACHIO

COMMISSION

The California state legislature created the Pistachio Com-

mission “to enhance and preserve the economic interests of

the State of California,” by, among other activities,

“[i]mplement[ing] public policy through [its] expressive con-

duct.” Cal. Food & Agric. Code § 63901. The Pistachio Com-

mission administers the Pistachio Act and supports the

pistachio industry through advertising, marketing, research,

and government relations campaigns. See Pistachio Act

§ 69051.

The Pistachio Commission is authorized to undertake a

broad range of activity: (1) research into production, food

safety, marketing, crop protection and production materials,

(2) promotion of the elimination of trade barriers,

(3) consumer education regarding the health benefits of pista-

chios, (4) demand-side regulation to stabilize the market,

(5) analysis of relevant foreign, federal and state regulation,

(6) cooperative crisis resolution, (7) cooperation with state

and federal agencies in foreign negotiations, and (8) support

of industry self-regulation. See Cal. Food & Agric. Code

§§ 63901-63901.3. This regulatory scheme, which applies to

all councils and commissions relating to agricultural or sea-

food markets in California, is designed to “work subject to,

and together with, the constraints placed on the agricultural

industry by state and federal statutes and regulations and

international restrictions.” Id. § 63901.4.

The Pistachio Commission has nine members, eight

selected by California pistachio growers and one selected by

the Secretary of the California Department of Food and Agri-

culture (“CDFA”). Pistachio Act § 69031. Acting through

committees chaired by the commissioners, the Commission

meets three times a year and employs a full-time staff to han-

7030 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

dle daily operations. In addition to appointing one member of

the committee, the Secretary of the CDFA (or a designee),

may attend and participate in Pistachio Commission or com-

mittee meetings as an ex officio member. Id. Like other enti-

ties in the state government, the Commission is subject to

transparency and ethics regulations designed to promote pub-

lic accountability.

The Secretary retains broad statutory authority

to: (1) review and approve the Pistachio Commission’s

annual budget and planned activities, (2) conduct fiscal and

compliance audits, (3) approve nomination and election pro-

cedures, (4) decide appeals from grievance petitions filed by

growers, and (5) suspend or discharge the Commission’s pres-

ident. See id. §§ 69051, 69069, 69092. The Secretary also

may require the Pistachio Commission to “correct or cease

any activity or function that is determined by the secretary not

to be in the public interest or to be in violation of [the Pista-

chio Act].” Id. § 69032. Although the Secretary has ultimate

authority over the Commission’s budget, operations, and

planning, the Secretary has declined to exercise many of his

more specific statutory powers.

Paramount and its various affiliated entities are the largest

producers of pistachios in California, together paying between

25 and 30 percent of the Pistachio Commission’s total assess-

ments in recent years. The expressive activity that has

attracted Paramount’s ire centers around generic print and

public relations advertising campaigns for California pista-

chios. The most recent campaign features the logo “California

Pistachios” and the slogan “Grab a Handful.” The campaign

included print advertising in magazines, media mailings, a

satellite tour, talk-show appearances by spokesperson Jane

Seymour, and promotion at the retail level (including point-

of-sale promotional materials, price recommendations, and

advertising incentives). Paramount maintains that these cam-

paigns are “ineffective in augmenting pistachio sales,” “do

not adequately feature the nuts themselves,” and are “antithet-

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7031

ical to Paramount’s interests,” which are to “increase sales by

differentiating its products from competitor’s products.”

Paramount also targets the Pistachio Commission’s govern-

ment relations activities, which are coordinated by a political

consultant who hires lawyers to represent the industry before

the International Trade Commission and the Commerce

Department, and to lobby government entities on behalf of the

pistachio industry. Paramount complains that the Pistachio

Commission has “not done enough to protect the domestic

pistachio industry from foreign pistachios.”

These offending activities are funded by mandatory assess-

ments paid by pistachio producers and importers (via proces-

sors who deduct dues from the amount they pay the

producers). See id. §§ 69081 & 69085. Failure to pay invites

financial penalties and possible enforcement action by the Pis-

tachio Commission. Id. §§ 69088-93. The majority of the

Commission’s annual budget, which has fluctuated between

$6.6 million and almost $8 million in recent years, is dedi-

cated to the challenged expressive activity.

II. FEDERAL REGULATION OF PISTACHIOS

In 2004, the United States Secretary of Agriculture issued

a marketing order for California pistachios under the Agricul-

tural Marketing Agreement Act of 1937, 50 Stat. 246, as

amended, 7 U.S.C. § 601 et seq. See 7 C.F.R. § 983 (the

“Marketing Order”). The Marketing Order regulates two

broad areas of the pistachio industry: aflatoxin levels and

minimum quality levels. Id. § 983.38-39. The Marketing

Order makes no mention of promotion, marketing, advertis-

ing, research, government relations or other potential expres-

sive activity to be carried out by the administrative committee

established by the federal regulations. The committee may

“deliberate, consult, cooperate and exchange information with

the California Pistachio Commission.” 7 C.F.R. § 983.71.

7032 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

III. PROCEEDINGS IN THE DISTRICT COURT

In October 2005, Paramount filed a complaint in the Cen-

tral District of California against the Pistachio Commission,

challenging the mandatory assessments under the First

Amendment and on various state law grounds.1 After Para-

mount moved for a preliminary injunction, 115 individual pis-

tachio growers filed motions to intervene as plaintiffs and

asked the district court to extend the preliminary injunctive

relief to them. Although the parties stipulated to the interven-

tions as to all but two of the growers, the district court denied

the motions to extend relief. The vast majority of the growers

were denied relief because they were generally unfamiliar

with the Pistachio Commission’s expressive activity and

could not articulate any clear objections to that activity.

William Koch and Don Quist are the only intervenors

whose motions were granted by the district court. Koch is a

pistachio grower who objects to the Pistachio Commission’s

generic message that pistachios are “healthful” and believes

the Pistachio Commission is no longer necessary. Quist, also

a grower, objects to the Commission’s marketing strategy,

which emphasizes price rather than brand.

In December 2005, the district court granted Paramount’s

motion for a preliminary injunction.2 The district court held

that it was unlikely that the California state government exer-

cised effective control over the Pistachio Commission for its

expressive activity to qualify as “government speech” under

Johanns. 544 U.S. at 560. It further held that under Glickman

v. Wileman Brothers & Elliot, Inc., 521 U.S. 457, 469-70

(1997), and United States v. United Foods, Inc., 533 U.S. 405,

1

Because the district court’s preliminary injunction rested solely on

First Amendment grounds, the First Amendment question is the only issue

on appeal.

2

Although we disagree with the district court’s ultimate conclusion, we

note its careful and extremely thorough treatment of the issues presented.

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7033

415 (2001), the assessments funded by the Pistachio Commis-

sion probably were not part of a larger economic regulatory

scheme so as to make them constitutionally permissible under

Glickman. As a result, the district court concluded that Para-

mount demonstrated a likelihood of success on the merits and

that the potential loss of First Amendment freedoms consti-

tuted irreparable injury.

ANALYSIS

We review for abuse of discretion the district court’s grant

of a preliminary injunction in favor of Paramount. Harris v.

Bd. of Supervisors, 366 F.3d 754, 760 (9th Cir. 2004). In our

review, we are mindful of the Supreme Court’s dictate that

this interlocutory posture “does not give the Court license to

depart from established standards of appellate review.” Ash-

croft v. Am. Civil Liberties Union, 542 U.S. 656, 664 (2004)

(citation omitted). Our review of underlying legal issues is de

novo, and review of underlying fact findings is for clear error.

See Harris, 366 F.3d at 760; see also Lands Council v. Mar-

tin, 479 F.3d 636, 643 (9th Cir. 2007) (as amended) (reversing

a district court’s failure to grant a preliminary injunction

where the district court “made a clear error of law”).

[1] In reviewing the injunction, we turn to the now-familiar

Ninth Circuit standard: a preliminary injunction is warranted

where plaintiffs demonstrate either (1) a likelihood of success

on the merits and the possibility of irreparable injury; or

(2) serious questions going to the merits and a balance of

hardships strongly favoring the plaintiffs. See Clear Channel

Outdoor, Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th

Cir. 2003). “These two formulations represent two points on

a sliding scale in which the required degree of irreparable

harm increases as the probability of success decreases.” Pru-

dential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204

F.3d 867, 874 (9th Cir. 2000). They are not separate tests but

rather “outer reaches of a single continuum.” Los Angeles

7034 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

Coliseum Comm’n v. Nat’l Football League, 634 F.2d 1197,

1201 (9th Cir. 1980).

I. LIKELIHOOD OF SUCCESS ON THE MERITS

A. JOHANNS v. LIVESTOCK MARKETING ASSOCIATION

[2] We approach Paramount’s First Amendment claims

with the benefit of the Supreme Court’s recent guidance in

Johanns, in which the Court framed “the dispositive question

[as] whether the generic advertising at issue is the Govern-

ment’s own speech and therefore is exempt from First

Amendment scrutiny.” 544 U.S. at 553.

[3] Johanns held that, without more, the First Amendment

is not implicated when the government requires private parties

to subsidize government speech. Id. at 559-60. “The govern-

ment, as a general rule, may support valid programs and poli-

cies by taxes or other exactions binding on protesting parties.

Within this broader principle it seems inevitable that funds

raised by the government will be spent for speech and other

expression to advocate and defend its own policies.” Id. at

559 (quoting Bd. of Regents v. Southworth, 529 U.S. 217, 229

(2000)). This “[c]ompelled support of government — even

those programs of government one does not approve — is of

course perfectly constitutional, as every taxpayer must attest.”

Id. (internal quotations omitted); see also R.J. Reynolds

Tobacco Co. v. Shewry, 423 F.3d 906 (9th Cir. 2005) (holding

that a promotional campaign designed by the California

Department of Health Services and funded by an excise tax on

tobacco companies was government speech immune to First

Amendment challenges).

The Supreme Court then applied these principles to the

Beef Promotion and Research Act of 1985 (the “Beef Act”),

Pub. L. No. 99-198, 99 Stat. 1597 (1985), see Johanns, 544

U.S. at 553, 558-60. The Beef Act “announce[d] a federal pol-

icy of promoting the marketing and consumption of ‘beef and

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7035

beef products,’ using funds raised by an assessment on cattle

sales and importation.” Id. at 553. The statute itself directs the

Secretary of Agriculture to implement this policy through a

program that includes a Beef Board, appointed by the Secre-

tary; an Operating Committee with equal representatives from

the Beef Board members and state beef councils; and manda-

tory assessments to fund all projects designed by the Operat-

ing Committee and approved by the Secretary. See id. at 553-

54.

[4] The Court held that the Beef Board’s promotional activ-

ities constitute the “Government’s own speech,” and are thus

unconstrained by the First Amendment.3 Id. at 560-67. In con-

cluding that the message of the promotional campaigns is “ef-

fectively controlled by the Federal Government,” the Court

emphasized three overlapping aspects of the program. See id.

at 560-61. First, Congress directed the establishment of the

program itself, including its promotional activities. Id. at 560-

61. Second, through the statutory and regulatory scheme,

Congress and the Secretary specify the general content of the

promotional campaigns, such as requiring that the campaigns

“shall . . . take into account” different types of beef products,

and shall not refer to “a brand or trade name of any beef prod-

uct” without prior approval. Id. at 561. Third, the record

showed that the Secretary “exercises final approval authority

over every word used in every promotional campaign.” Id. at

563.

The Court also distinguished Keller v. State Bar of Califor-

nia, 496 U.S. 1 (1990), a challenge to the State Bar’s use of

mandatory dues for political and ideological campaigns. The

key difference between the promotions under the Beef Act

3

Although the majority opinion of the Court held that the challenged

assessments were permissible as government speech, Justices Breyer and

Ginsburg reasoned that these assessments are better analyzed as permissi-

ble economic regulation. Johanns, 544 U.S. at 569 (Breyer, J., concur-

ring); id. (Ginsburg, J., concurring in the judgment).

7036 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

and the speech at issue in Keller was that the “communicative

activities” in Keller “were not prescribed by law in their gen-

eral outline and not developed under official government

supervision.” Johanns, 544 U.S. at 562.

B. JOHANNS AS APPLIED TO THE PISTACHIO COMMISSION

The framework of statutes and regulations governing the

Pistachio Commission and its activities essentially mirrors the

scheme addressed in Johanns. Although the state of Califor-

nia may, in practice, exercise less oversight over the Pistachio

Commission than the Secretary of Agriculture exercises over

the Beef Board, on the record developed thus far, that distinc-

tion is not enough to differentiate the activities of the Pista-

chio Commission from those of the Beef Board.

[5] The structure of the Pistachio Commission and its rela-

tionship to the State of California is nearly identical in design

to that of the Beef Board at issue in Johanns. The Pistachio

Commission consists of nine members, of which eight are

elected by industry members and one is appointed by the Sec-

retary of the CDFA.4 The Secretary must also concur in any

nomination and election procedures adopted by the Pistachio

Commission. Pistachio Act § 69069.

The Pistachio Commission is directed to “promote the sale

of pistachios by advertising and other promotional means,” id.

§ 69051(i), while the Beef Board is tasked with “carrying out

a coordinated program of promotion and research designed to

strengthen the beef industry’s position in the marketplace and

4

Paramount makes much of the fact that in Johanns, the entire Beef

Board was “appointed” by the Secretary of Agriculture, but only one

member of the Pistachio Commission is “appointed” by the Secretary of

the CDFA. This distinction, while accurate, is somewhat exaggerated. The

Beef Board is appointed by the Secretary of Agriculture from among a list

of candidates nominated by the trade associations. 7 C.F.R. § 1260.141(b).

Both boards are dominated by industry appointees, not independent third

party board members.

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7037

to maintain and expand domestic and foreign markets and

uses for beef and beef products.” 7 U.S.C. § 2901(b). The

Secretary of the CDFA is authorized to attend and participate

in the meetings where promotional activities are planned, Pis-

tachio Act § 69041, just as the Secretary of Agriculture or his

designee may attend the meetings where the Beef Board

develops marketing plans, see 7 C.F.R. § 1260.168(h). As a

practical matter, the Secretary of the CDFA or his representa-

tive routinely attends Commission board meetings.

The Secretary of Agriculture approves the Beef Board’s

detailed plans for promotional or marketing activities. See 7

C.F.R. §§ 1260.150(f)-(g) & 1260.169. Similarly, the Pista-

chio Commission must submit to the Secretary of the CDFA,

for his concurrence, “an annual statement of contemplated

activities authorized [by the Pistachio Act], including adver-

tising, promotion, marketing research, and production

research.” Pistachio Act § 69051(q).

Although there is no provision in the Pistachio Act allow-

ing the Secretary of the CDFA to remove members of the Pis-

tachio Commission, compare Johanns, 544 U.S. at 563, the

Pistachio Act authorizes the Secretary of the CDFA to “cor-

rect or cease any existing activity or function that is deter-

mined by the secretary not to be in the public interest or in

violation of [the Pistachio Act].” Pistachio Act § 69032. And,

the Secretary may suspend or discharge the Commission’s

president if he has engaged in any conduct that the Secretary

determines is not in the public interest. Id. § 69051(d).

[6] Other factors also demonstrate the Secretary’s control

over the Commission. For example, growers dissatisfied with

any Commission activity may file a grievance, which can be

directly appealed to the Secretary. Id. § 69092. The Secretary

also must approve the Commission’s annual budget before the

Commission may disburse funds, id. § 69051(p), and he may

conduct a separate fiscal compliance audit whenever he

deems such an audit is necessary, id. § 69051(h). Given the

7038 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

similarities to Johanns and the level of control vested in the

Secretary, Paramount has not yet demonstrated that the Pista-

chio Commission should be classified as a nongovernmental

entity.

Paramount argues that Johanns should not apply here

because, in practice, the Secretary of the CDFA exercises “no

control” over the Pistachio Commission’s promotional and

marketing activities. In Johanns, the Court held that the

speech at issue in that case more than met the requirements

for qualifying as government speech. See 544 U.S. at 563

(holding that “the beef advertisements here are subject to

political safeguards more than adequate to set them apart from

private messages”). However, Johanns did not set a floor or

define minimum requirements. Id.

[7] At this stage of the proceedings, we cannot say that Par-

amount is likely to overcome the barrier of Johanns. Para-

mount has not made a sufficient showing that the Secretary of

the CDFA exercises inadequate oversight over the activities

of the Commission. To be sure, the Secretary of the CDFA

exercises less control over the Pistachio Commission than the

Secretary of Agriculture exercised over the Beef Board.

Nonetheless, the marketing and promotional plans submitted

to the CDFA include a significant amount of detail. For exam-

ple, they include a general description of the advertisements,

detail the themes to be emphasized, the actors to be used, the

demographics to be targeted, and the media to be employed.

Last year’s budget noted that the “proposed advertising cam-

paign will feature three generations of [Jane] Seymour’s fam-

ily . . . making the connection that heart disease is not a

dicriminator of age, and that California pistachios can be an

important part of lifetime heart health.” The proposal

describes the specific magazines in which the advertisements

will run, notes the approximate timing of their publication (in

February, to coincide with the Super Bowl, for example), and

often includes specific words and imagery to be used. The

overall budget also includes specific line-item budgets for

PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM. 7039

promotional, advertising, marketing, and research activities, a

report from a retained private advertising agency that dis-

cusses the advertisements generally and each selected publi-

cation and promotional activity specifically, and a 15-page

overview of the entire public relations strategy, including

advertising, marketing, and promotions.

[8] Although the Secretary has not rejected or edited pro-

posals, or taken a particularly active role in meetings, this pas-

sivity is not an indication that the government cannot exercise

authority. See Johanns, 544 U.S. at 560 (focusing on effective

control). The Secretary, through his staff, retains authority to

control both the activities and the message. The fact that he

has not played an active role cannot be equated with abdica-

tion of his role. Just as “[t]he Secretary of Agriculture does

not write [the copy of the beef advertisements] himself” for

the Beef Board, neither should such oversight be required for

the California scheme to pass constitutional muster. Id.

[9] We acknowledge that there are differences in actual

oversight between the beef scheme and the pistachio scheme,

but these factual differences are legally insufficient to justify

the injunction. To draw a line between these two approaches

to oversight risks micro-managing legislative and regulatory

schemes, a task federal courts are ill-equipped to undertake.

“The message set out in the [pistachio] promotions is from

beginning to end the message established” by the state gov-

ernment. Id.5

II. BALANCE OF HARDSHIPS

[10] Although, in our view, Paramount has not demon-

strated a likelihood of success on the merits, the further ques-

tion is whether the balance of hardships tips sharply in its

5

Because we rest our analysis on Johanns, we decline to reach the dis-

trict court’s resolution of the compelled speech challenge under Glickman

and United Foods.

7040 PARAMOUNT LAND CO. v. CALIFORNIA PISTACHIO COMM.

favor. By bringing a colorable First Amendment claim, Para-

mount certainly raises the specter of irreparable injury. But

simply raising a serious claim is not enough to tip the hard-

ship scales. See Preminger v. Principi, 422 F.3d 815 (9th Cir.

2005) (holding that a preliminary injunction was not war-

ranted because plaintiffs had failed to show likelihood of suc-

cess on the merits of a First Amendment claim and did not

demonstrate significant irreparable harm); Clear Channel,

340 F.3d at 816-17 (vacating a preliminary injunction where

plaintiffs were unlikely to succeed on the merits even though

their First Amendment claims did raise the possibility of

irreparable injury).

In its hardship analysis, the district court relied exclusively

on the potential deprivation of Paramount’s First Amendment

freedoms to hold that the balance of hardships tipped in favor

of Paramount. It also found that neither Paramount nor the

intervenors presented evidence that they would experience

serious financial or other distress in the event that they were

required to continue paying assessments during the course of

the litigation. By contrast, the Pistachio Commission has

shown that the injunction has resulted in significant hardship.

The district court found that because assessments from Para-

mount might comprise 25 to 30 percent of the Pistachio Com-

mission’s revenues, entry of an injunction would likely force

the Pistachio Commission to curtail its operations signifi-

cantly.

[11] Because, at this stage, “the underlying constitutional

question is [not] close,” Ashcroft, 542 U.S. at 664, and

because the balance of hardships does not tip in Paramount’s

favor, we hold that the district court erred in granting Para-

mount’s motion for a preliminary injunction. The order grant-

ing the preliminary injunction is REVERSED; the

preliminary injunction is VACATED; and the case is

REMANDED to the district court for further proceedings.