Dairy checkoff decision reversed

SALEM, Ohio – Three federal judges sided with a Pennsylvania couple last week and declared the dairy checkoff unconstitutional.

The U.S. Third Circuit Court of Appeals ruling came down Feb. 24, just six weeks after the court heard arguments in the appeal.

Different methods. The suit was filed in 2002 by dairy farmers Joe and Brenda Cochran of Westfield, Pa. Their 160-cow herd and farm is in Tioga County, in the north central part of the state.

The couple contested the checkoff, saying their herd management and grazing system produced superior milk and protected the environment but wasn’t recognized with the generic checkoff advertising.

The checkoff has a mandatory assessment of 15 cents per hundredweight on all milk sold.

According to the Cochrans, their herd production adds nearly $4,000 annually to the nationwide checkoff.

And that amount, the Cochrans said, took away their profits and competitiveness in the dairy industry.

A district court ruled the checkoff constitutional in late March 2003, prompting the Cochrans to appeal.

Ruling. In the reversal, the court of appeals said the checkoff is private speech, not government speech, and has First Amendment applications.

The court also held that the checkoff violated the Cochrans’ free speech and association rights and forced them to pay for promotion they didn’t agree with.

Other cases. In making their ruling, the three-judge court looked to previous checkoff cases argued before the U.S. Supreme Court for guidance.

In United States vs. United Foods, the court ruled the checkoff violated the First Amendment by compelling mushroom growers to pay for generic industry advertising.

In Glickman vs. Wileman Bros. & Elliott, the court ruled the suit brought by California nectarine and peach marketers relied more heavily on economic regulations than First Amendment freedom, and ruled that checkoff to be constitutional.

The court also cited two other decisions that said the beef checkoff was not government speech because it required only beef producers to fund it and it attributed the advertising to those producers.

The Third Circuit judges said “the government’s role in the [dairy checkoff] is in all material respects the same as it was in the [beef checkoff] … .”

Bound together? Judges said the district court misapplied the Glickman ruling when it decided the Cochran’s initial complaint.

The court said although dairymen are subject to a “patchwork” of federal and state laws and marketing orders, “there is no association that all milk producers must join that would make the entire industry analogous to a union.”

In its decision, the court said “although the dairy industry may be subject to a labyrinth of federal regulation,” the dairy checkoff wasn’t part of any regulatory program and was speech only.

Reactions. The Cochrans are “ecstatic” with the ruling.

“We feel the court struck a cord with this decision in our favor. The constitution is alive and well,” Joe Cochran said.

The family is pleased with the three-judge unanimous decision and hopes if the case is appealed further, the full appeals court will refuse to hear it.

“This is a step in the right direction,” Cochran said.

“If they’re going to have an advertising campaign, it should be voluntary. It’s not benefiting us, that’s why we don’t want to pay into it,” he said.

Disappointment. Checkoff supporters are disappointed by the decision.

“As a dairyman who has contributed to the dairy checkoff for more than 20 years, I believe this is an unfortunate ruling on a program that continues to bring so much benefit to all of the nation’s more than 70,000 dairy producers,” said Paul Rovey, an Arizona dairy producer.

Rovey is chairman of Dairy Management Inc., which manages the checkoff program.

“I’m confident the dairy checkoff program will ultimately prevail in the litigation process,” Rovey said.

Checkoff goals. Enacted by Congress in 1983, the dairy checkoff is funded by dairy producers through a mandatory 15-cent per hundredweight assessment on all milk domestically produced and marketed commercially.

Last year, the program collected more than $250 million in assessments.

The checkoff board directs programs such as nutrition research and education, 3-A-Day of Dairy, and the milk mustache and “Ahh, the power of cheese.” advertisements.

Up next. Secretary of Agriculture Ann Veneman and the USDA are working with the federal department of justice to determine the next step.

The justice department has the right to appeal the decision to the full panel of the Third Circuit Court of Appeals judges.

(Reporter Andrea Myers welcomes reader feedback by phone at 1-800-837-3419, ext. 22, or by e-mail at amyers@farmanddairy.com.)