Wallace v. Consumers Cooperative of Berkeley, Inc.

170 Cal. App. 3d 836, 216 Cal. Rptr. 649, 1985 Cal. App. LEXIS 2282
CourtCalifornia Court of Appeal
DecidedJuly 31, 1985
DocketA015062
StatusPublished
Cited by43 cases

This text of 170 Cal. App. 3d 836 (Wallace v. Consumers Cooperative of Berkeley, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wallace v. Consumers Cooperative of Berkeley, Inc., 170 Cal. App. 3d 836, 216 Cal. Rptr. 649, 1985 Cal. App. LEXIS 2282 (Cal. Ct. App. 1985).

Opinion

*840 Opinion

SCOTT, J.

The Director of the Department of Food and Agriculture of the State of California (the Director) appeals from an order awarding attorney’s fees pursuant to Code of Civil Procedure section 1021.5 1 to respondents as the successful parties in litigation which challenged the validity of mandatory minimum retail milk prices in the state. Respondents are the Consumers Cooperative of Berkeley, a California corporation, and the Consumers Union of the United States, a nonprofit membership organization.

I

In the late 1930’s the Legislature enacted the Milk Stabilization Act, which authorized the Director to set minimum prices for milk at the producer, wholesale, and retail levels. (See Jersey Maid Milk Products Co. v. Brock (1939) 13 Cal.2d 620, 626-632 [91 P.2d 577].) The purpose of the act was to stabilize milk production and provide an adequate milk supply at reasonable prices to consumers. (See In re Willing (1939) 12 Cal.2d 591, 594 [86 P.2d 663].)

Over a period of years, changes in milk production, marketing, and distribution undercut the original justifications for mandatory minimum wholesale prices, and in 1973 and 1974 minimum wholesale prices were suspended throughout most of the state.

In the early 1970’s, various consumer groups and others began urging unsuccessfully that there was also no longer any need for mandatory minimum retail milk prices. During 1974 and 1975, respondent Consumers Cooperative of Berkeley, Inc. (Cooperative), a consumer-owned retail food chain, respondent Consumers Union (Union) and other consumer groups submitted several petitions requesting the Director to suspend the retail milk price regulations.

There was little response to these petitions. In April 1975, the Director did suspend minimum retail prices only in the Sacramento area; however, *841 despite requests by various groups, the department made no public comment regarding the effect of the experiment, and refused requests by these consumer groups to release a draft of a report documenting the positive impact and lack of adverse consequences of the suspension.

Early in 1976, Cooperative decided to challenge the legality of the minimum milk retail price regulations through litigation. On February 13, 1976, it began to sell milk at eight cents per half gallon below the minimum price then set for its marketing area. On February 15, the Director obtained a temporary restraining order prohibiting Cooperative from selling milk at prices below the mínimums. On March 10, a preliminary injunction was issued; however, the court limited the effectiveness of the injunction to 120 days and stated that Cooperative had “made a colorable showing that it will prevail at a trial on the merits . . . .”

Cooperative and Union then filed a cross-complaint and a cross-complaint in intervention seeking an injunction against the continued enforcement of minimum retail milk price orders, and a declaration that the statewide minimum retail milk pricing program was unconstitutional. The Director demurred to both cross-complaints on various grounds; the demurrer was overruled except with respect to one cause of action.

The Director also filed a complaint pursuant to former Food and Agriculture Code section 62642 against Cooperative, seeking civil penalties of $19,000.

Respondents commenced discovery. During a deposition in July 1976, the Director stated that he had never considered that the suspension of retail milk prices in the state was warranted. He also testified that while suspension of milk prices on a statewide basis was an “ongoing viable alternative in an analytical sense,” he was not giving the matter specific consideration at that time.

In August 1976, however, L. R. Walker, chief of the department’s Bureau of Milk Stabilization and Bureau of Milk Marketing Enforcement testified during a deposition that the department was considering holding hearings on retail price suspension.

The parties then entered into settlement negotiations. Two weeks before the September 1976 trial date, the parties agreed to a memorandum of understanding as follows. The trial date would be continued to November 15, 1976. If the Director failed to notice formal public hearings on the statewide suspension of minimum retail milk prices by that date, the action would be *842 tried. If the Director conducted hearings and suspended minimum prices by January 1, 1977, respondents would drop their challenges to the statutory and administrative procedures as moot. In addition, pursuant to a separate agreement, the Director’s “companion action” for civil penalties was to be dismissed, with Cooperative remitting a payment of $500 to the Director.

In November, the Director issued notice of hearings. During November and December, respondents, among others, appeared at various administrative hearings, presenting testimony in favor of suspension. On December 30, 1976, the Director issued orders suspending minimum retail milk price regulations throughout the state.

On March 14, 1977, respondents moved for an award of attorney’s fees on the ground that they were the prevailing parties in this litigation. The trial court concluded, inter alia, that the action “set in motion the machinery by which milk prices ultimately were suspended,” and that respondents were entitled to fees. 2 After an additional hearing, the court awarded fees in an amount in excess of $200,000. The award included compensation for services rendered in the civil penalty action and at the suspension hearings.

II

First, the Director contends that the trial court erred in overruling its demurrers to the cross-complaint and cross-complaint in intervention. The Director reasons that the overruling of the demurrers was “erroneous and prejudicial since it allowed the lower court to retain jurisdiction in the matter and ultimately make the award of attorney’s fees.”

To overcome respondents’ argument that the rulings on the demurrer are not cognizable in this appeal, the Director relies in part on the rule that although an order overruling a demurrer is nonappealable, it is reviewable on appeal from the final judgment entered in the action. (See, e.g., Miller v. Pacific Constructors, Inc. (1945) 68 Cal.App.2d 529, 538-544 [157 P.2d 57].) However, this action was resolved not by a trial on the merits resulting in a final judgment, but by a memorandum of understanding which led to the action being dropped from the court’s calendar. In effect, the merits of this case were disposed of by a compromise agreement. “ ‘[A] valid compromise agreement has many attributes of a judgment, . . . and is de *843

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Bluebook (online)
170 Cal. App. 3d 836, 216 Cal. Rptr. 649, 1985 Cal. App. LEXIS 2282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wallace-v-consumers-cooperative-of-berkeley-inc-calctapp-1985.