Quantum Corp. v. Rodime PLC

851 F. Supp. 1382
CourtDistrict Court, D. Minnesota
DecidedApril 11, 1994
DocketCiv. No. 4-93-214
StatusPublished
Cited by1 cases

This text of 851 F. Supp. 1382 (Quantum Corp. v. Rodime PLC) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Quantum Corp. v. Rodime PLC, 851 F. Supp. 1382 (mnd 1994).

Opinion

MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, Chief Judge.

In this action the Minnesota Milk Producers Association (MMPA) and its elected directors, all family dairy farmers, seek a declaration that the milk marketing orders promulgated by defendant United States Department of Agriculture (USDA) for all areas east of the Rocky Mountains are in violation of the Agricultural Marketing Agreement Act of 1937 (the AMAA), 7 U.S.C. §§ 601-24. Before the court are cross motions for summary judgment.

I.

Federal milk marketing orders grew out of the need to help milk producers achieve and maintain some bargaining power over the prices they received for their product. Several characteristics of the industry cause an inherent instability in milk marketing and producer bargaining power. Milk is bulky and must be moved promptly to market. Because it is produced every day, farmers must continue to ship it even when market prices are not satisfactory. Federal milk orders are designed to promote orderly marketing conditions by defining the terms of purchase between producers and handlers of milk in a specified area. See, The Federal Milk Marketing Order Program, USDA, Agricultural Marketing Service, Marketing Bulletin No. 27.

This case has a somewhat involved procedural background. After the original complaint was dismissed for lack of standing, the Court of Appeals reversed and remanded,1 holding plaintiffs’ claims actionable under the AMAA. After remand, defendant’s motion for a stay was granted to allow the Secretary time to issue a final decision in an ongoing administrative proceeding addressing certain provisions of federal milk marketing orders (pricing of Class I and reconstituted milk2).

Under the current system, grade A milk is divided into three Classes: I, II, and III. Class I is fluid milk for consumption, and it has the highest price. Class II is milk used in soft dairy products like yogurt, ice cream, and cottage cheese; its price is slightly lower. Class III has the lowest price and generally includes milk used in storable hard manufactured products like cheese, butter, nonfat dry milk, and evaporated milk.

Under § 608e(5) of the AMAA, dairy producers are required to be paid the same price regardless of the ultimate use of their milk. This is accomplished through the “blend price”. The blend' price is a weighted average value of the milk distributed in the marketing area. The higher the percentage of fluid or Class I use in the marketing area, the higher the blend price.

The prices for the various classes are set according to formulas. The base price for all the formulas is the “M-W price”, which is the average price paid per hundredweight for Grade B manufacturing milk in Minnesota and Wisconsin.3 The Class III price equals [1392]*1392the M-W price. The Class II price is the MW price plus a Class II differential of approximately 10 cents per hundredweight. The Class I price is the M-W price plus a fixed dollar amount called the Class I differential. Class I differentials are different for each marketing order. The Class I differentials range from $1.20 per hundredweight in Minneapolis to well over $4.00 in some southern states. ‘ In general, the Class I differentials increase with the marketing area’s distance from Eau Claire, WI, the center of the traditional milk-producing region.

Administrative hearings began in April, 1990, and were convened at several locations over 43 days, with testimony from over 200 witnesses. After a recommended decision was issued on November 22,1991, exceptions were submitted and considered. The final decision issued on March 5, 1993. It made no changes to the Class I pricing system, but did make substantial changes to the reconstituted milk provisions.4 The USDA conducted the required referenda and polling5 in the 40 areas affected by the amended marketing orders changing the reconstituted milk provisions, and the order affecting Minnesota producers was ratified.

Plaintiffs’ challenge in this case is now focused on the system for fixing Class I fluid milk prices in all milk marketing orders east of the Rocky Mountains. These provisions were left unchanged by the final decision. Plaintiffs do not ask the court to adopt any of the over 35 specific proposals for changing the Class I pricing system suggested during the administrative hearings. Rather, plaintiffs ask the court to rule that the Secretary’s decision to maintain the existing system is unlawful.

Plaintiffs seek the following relief: 1) a declaration that the existing Class I pricing system is unlawful because it violates the requirements of the AMAA; 2) an order to the Secretary of Agriculture to convene administrative hearings within 60 days to take evidence on proposals to amend the Class I system; and 3) an order to the Secretary to issue a final decision on such new proceeding and hold any necessary referenda on amended orders within 9 months of the order.

II.

Plaintiffs argue that the proper standard of review for the Secretary’s interpretation of the AMAA is found in Chevron U.S.A., Inc. v. Natural Resource Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). The statute must first be examined to determine if Congress has spoken to the precise question at issue. “If the intent of Congress is clear, that is the end of the matter; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43, 104 S.Ct. at 2781. If the intent of Congress is not clear on the face of the statute, the question is “whether the agency’s [interpretation] is based on a permissible construction of the statute.” Id.

Plaintiffs argue that the agency’s final decision regarding Class I milk prices should be rejected under the first step of the Chevron analysis. The decision violates clear Congressional intent that prices set by the milk orders ensure producers share equally the benefits of the high Class I price and the burdens of the lower surplus milk price. Furthermore, they argue the final decision does not provide a reasonable interpretation of order prices under the AMAA as applied to today’s dairy industry. It is not reasonable because it fails to explain how the agency decided that Class I prices reflect feed costs and other economic conditions that affect supply and demand or how Class I prices serve the public interest. They claim the decision also ignores relevant factors relating to the availability and adequacy of milk supplies and comes to illogical conclusions.

Plaintiffs argue Congress expressed clear standards in 7 U.S.C. § 608c for pricing milk under the federal milk orders. That section sets out the scope, establishment and operation of federal orders. Two of the most important parts are §§ 608c(5) and (18). Subsection 608c(5) establishes the concept of sharing the benefits and burdens of Class III [1393]*1393and Class I prices through the blend price. Subsection 608c(18) sets out the pricing criteria to be used by the Secretary. Under § 608c(18) minimum prices must:

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Related

Quantum Corp. v. RODIME PLC
851 F. Supp. 1382 (D. Minnesota, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
851 F. Supp. 1382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/quantum-corp-v-rodime-plc-mnd-1994.