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Avocados Plus Inc. v. Johanns

March 15, 2006

AVOCADOS PLUS INC., ET AL., PLAINTIFFS,
v.
MIKE JOHANNS, SECRETARY OF AGRICULTURE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Gladys Kessler U.S. District Judge

MEMORANDUM OPINION

Plaintiffs are seven importers of Hass avocados for distribution and consumption in the United States.*fn1 Defendants are Mike Johanns, Secretary of Agriculture (the "Secretary"); A.J. Yates, Administrator of the Agricultural Marketing Service ("AMS"); the U.S. Department of Agriculture ("USDA"); Robert Bonner, Commissioner of Customs and Border Protection; and the U.S. Customs Service (collectively, the "Defendants"). The Jerome J. Stehly and Christina M. Stehly Living Trust of November 30, 1999 and Charley Wolk (collectively, the "Intervenors") have intervened in support of the Defendants.

Plaintiffs challenge the Hass Avocado Promotion, Research, and Information Act of 2000, 7 U.S.C. §§ 7801 et seq. (the "Avocado Act" or "Act"), alleging that it violates their First Amendment rights to freedom of speech and freedom of association.

This matter is now before the Court on the Intervenors' Motion to Dismiss or, in the Alternative, for Summary Judgment [Dkt. #71], the Defendants' Motion to Dismiss or, in the Alternative, for Summary Judgment [Dkt. #73], and Plaintiffs' Motion for Summary Judgment [Dkt. #74]. Upon consideration of the Motions, Oppositions, Replies, applicable case law, and the entire record herein, and for the reasons stated below, the Intervenors' Motion is granted in part and denied in part, the federal Defendants' Motion is granted in part and denied in part, and Plaintiffs' Motion is denied.

I. BACKGROUND*fn2

Plaintiffs' effort to defeat the Avocado Act has been ongoing for nearly four years and this is the Court's third Memorandum Opinion in this case. As such, the Court will limit its discussion here to the facts relevant to the instant Motions. Additional recitations of the facts can be found in this Court's February 14, 2003 Memorandum Opinion [Dkt. # 28] and in the June 18, 2004 opinion by the Court of Appeals. See Avocados Plus et al. v. Veneman et al., 370 F.3d 1243 (D.C. Cir. 2004).

A. The Avocado Act

Congress enacted the Avocado Act in 2000 to "(1) strengthen the position of the Hass avocado industry in the domestic marketplace and (2) maintain, develop[,] and expand markets and uses for Hass avocados in the domestic marketplace." 7 U.S.C. § 7801(b). To achieve these goals, the Act authorizes a generic marketing campaign to be financed through a per-pound assessment on Hass avocados grown domestically or imported into the United States.*fn3 Before the assessments can be levied, however, the Act requires the Secretary to hold a referendum among those producers and importers that would be required to pay them. Id. § 7805. If that referendum succeeds, the Act allows the Secretary to begin collecting assessments and requires the creation of a Hass Avocado Board ("HAB" or "Board") to administer the funds received.

The Secretary announced the referendum on February 19, 2002, and it passed overwhelmingly during voting that occurred between June 24 and July 12, 2002. See 67 Fed. Reg. 56895 (Sept. 6, 2002). Accordingly, the Board was established on September 6, 2002 and collection of the assessments started in early 2003.

The HAB is composed of twelve members, all of whom have been appointed by the Secretary, with seats divided proportionally between domestic producers and importers. See id. § 7804(b)(2).

It is the Board's statutory responsibility to "propose and develop (or receive and evaluate), approve, and submit to the Secretary for approval . . . plans or projects for Hass avocado promotion, industry information, consumer information, or related research." Id. § 7804(c)(6). Such efforts must be "directed toward increasing the general demand for Hass avocados in the domestic marketplace," and must be approved by the Secretary before being publicly disseminated. Id. §§ 7804(d)(2)(A)(ii) - (3).

The Board may fulfill its duties, including its mandate to promote the domestic consumption of Hass avocados, by entering into a contract with "an avocado organization established by State statute in a State with the majority of Hass avocado production in the United States." Id. § 7804(e)(1)(A); see also 7 C.F.R. § 1219.38(h). Exercising this authority, the Board contracted with the California Avocado Association (the "CAC") in 2002, giving it day-to-day responsibility for administering Avocado Act programs. The Board, and ultimately the Secretary, however, direct and control all of the CAC's activities. See 7 U.S.C. § 7804(e)(1)(B); 7 C.F.R. § 1219.51.

Much of the promotional work required by the Act is done in partnership with avocado growers' and importers' associations. Any "State organization of avocado producers established pursuant to state law," such as the CAC, is eligible to a receive a refund of 85 percent of the assessments paid by its members. 7 U.S.C. § 7804(h)(8). Any "importers association" that is either established pursuant to state law or that meets certain requirements also applicable to the Board itself may likewise receive funding equivalent to 85 percent of its members' assessments. Id. § 7804(h)(9). Among the requirements the Act imposes on the Board, and thus on an association certified under this provision, is the duty to "submit to the Secretary for approval . . . plans or projects for Hass avocado promotion, industry information, consumer information, or related research." Id. § 7804(c)(5)(B). To date, the Mexican Hass Avocado Importers' Association ("MHAIA") and the Chilean Avocado Importers' Association have been certified to receive funds under this provision.

All assessments refunded to growers' or importers' associations must be spent on "promotion, research, consumer information, and industry information plans and projects" consistent with the Act. Id. §§ 7804(h)(8)-(9). The Act defines these terms with specificity, id. § 7802, and requires the Secretary's approval before any such plans and projects may be disseminated. See 7 U.S.C. § 7804(d)(3); see also 7 C.F.R. §§ 1219.54(l), 1219.21, 1219.50.

The Secretary is required to review all advertisements and promotional materials created with Avocado Act funding, whether by the Board itself or by any eligible growers' or importers' association, and must make the final decision whether or not to use them. See 7 U.S.C. § 7804(d)(3); 7 C.F.R. § 1219.50(a)-(c). Through his delegate, the Chief of the Fruit and Vegetable Research and Promotion Branch of the AMS, the Secretary has in fact exercised "careful oversight over all promotional programs and materials" funded by Avocado Act assessments, whether they were created by the Board or by a growers' or importers' association. See Defs.' Mot. to Dismiss or, in the Alternative, for Summ. J. [#73], Ex. 2, Decl. of Margaret B. Irby (hereinafter "Irby Decl.") ¶ 5.

B. Procedural History

Plaintiffs filed this action on September 11, 2002 seeking declaratory and injunctive relief, including an order prohibiting the Secretary from collecting assessments under the Act. See Compl. at 17. They amended their Complaint on October 23, 2003, adding Defendants Bonner and U.S. Customs Service. See First Am. Compl.

On February 14, 2003, the Court denied Plaintiffs' Motion for Preliminary Injunction, holding that the Plaintiffs did not have a substantial likelihood of success on most of their claims -- including their freedom of speech claims -- and that the balance of harms weighed against injunctive relief. See Avocados Plus, Inc. et al. v. Veneman et al., No. 02-cv-1798, Mem. Op. (D.D.C. Feb. 14, 2003). The Court also denied Defendants' and Intervenors' Motion to Dismiss for failure to exhaust administrative remedies. See id.

After Defendants filed a Motion to Alter or Amend the Judgment, the Court reconsidered its determination that the Act did not require Plaintiffs to exhaust their administrative remedies. The Court concluded that administrative exhaustion was, in fact, required, and that Plaintiffs could not maintain their suit without first bringing their claims before the USDA. Accordingly, it dismissed the case on April 14, 2003. See id. Mem. Op. (D.D.C. Apr. 14, 2003). Plaintiffs appealed that ruling and on June 18, 2004, the Court of Appeals vacated it, holding that "while the matter is not free from doubt, . . . the language of the Avocado Act does not ...


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