ANN VENEMAN, Secretary, U.S. Department of Agriculture,NATIONAL DAIRY PROMOTION BOARD

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

2-24-2004

ANN VENEMAN, Secretary, U.S. Department of Agriculture,NATIONAL DAIRY PROMOTION BOARD Precedential or Non-Precedential: Precedential

Docket No. 03-2522 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004

Recommended Citation "ANN VENEMAN, Secretary, U.S. Department of Agriculture,NATIONAL DAIRY PROMOTION BOARD" (2004). 2004 Decisions. Paper 940. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/940

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UNITED STATES COURT OF Argued: January 12, 2004 APPEALS FOR THE THIRD CIRCUIT Before: Sloviter, Rendell and Aldisert, Circuit Judges.

No. 03-2522 (Filed: February 24, 2004)

JOSEPH S. COCHRAN; BRENDA S. COCHRAN, Steven M. Simpson (Argued) Institute for Justice Appellants 1717 Pennsylvania Ave., N.W. Suite 200 Washington, DC 20006 v. Walter T. Grabowski ANN VENEMAN, Secretary, U.S. Holland, Grady & Grabowski Department of Agriculture; 61 North Washington Street NATIONAL DAIRY PROMOTION Wilkes-Barre, PA 18701 BOARD ATTORNEY FOR APPELLANTS Appellees Thomas A. Marino, And United States Attorney Matthew M. Collette (Argued) FRED LOVELL; LEE GREENWALT; Douglas N. Letter JACKIE ROOT; EARNEST NORMAN; Attorneys, Appellate Staff STEPHEN MASHALL; CECIL Civil Division, Room 9008 MOYER; JAMES VANBLARCOM Department of Justice Washington, D.C. 20530-0001 Intervenors-Appellees ATTORNEY FOR APPELLEES

Richard T. Rossier (Argued) Appeal from the United States District Alex Mendez Court for the Middle District of McLeon, Watkinson & Miller Pennsylvania One Massachusetts Ave. N.W. Suite 800 Washington, D.C. 20001 (D.C. Civil No. 02-cv-00529) ATTORNEY FOR INTERVENORS- District Judge: APPELLEES Honorable John E. Jones, III

creating the National Dairy Promotion and Research Board (“Dairy Board”) to administer the program. To finance the OPINION OF THE COURT promotional projects and the Dairy Board’s administration of them, the Dairy Act and implementing order require every milk producer in the United States to pay mandatory assessments of 15 cents per ALDISERT, Cicuit Judge. hundredweight of milk sold.1 Id. § 4504(g); 7 C.F.R. § 1150.152. Neither the The American public is very Dairy Act nor the order permits dissenting familiar with the “Got Milk? ®” ads on milk producers to withhold contributions television and in the print media. for advertising or promotional projects to This appeal requires us to decide which they object. whether a federal statute may compel a The Cochrans object to paying small dairy farm in Pennsylvania to help these assessments and filed an action in the pay for the white-mustache milk advertisements and other dairy promotions. Implicated here are general First 1 The Dairy Act provides: Amendment precepts that protect the right to refrain from speaking and the right to The order shall provide that each refrain from association, and the specific person making payment to a issue of whether the government may producer for milk produced in the compel individuals to fund speech with United States and purchased from which they disagree. the producer shall . . . collect an Joseph and Brenda Cochran are assessment based upon the independent small-scale dairy farmers. number of hundredweights of They are not members of any dairy milk for commercial use handled manufacturing or marketing cooperative. for the account of the producer They alone determine how much milk to and remit the assessment to the produce, how to sell and market it and to Board. whom it will be sold. ... The rate of assessment for milk . . The Dairy Promotion Stabilization . prescribed by the order shall be Act of 1983, 7 U.S.C. § 4501 et seq. 15 cents per hundredweight of (“Dairy Promotion Act,” “Dairy Act,” or milk for commercial use or the “Act”), provides for the creation of the equivalent thereof, as determined Dairy Promotion Program and authorizes by the Secretary. the Secretary of the Department of Agriculture (“Secretary”) to issue an order 7 U.S.C. § 4504(g).

United States District Court for the Middle where and how it is produced, and thereby District of Pennsylvania seeking a forces them to subsidize speech with declaration that the Dairy Act violates their which they disagree. First Amendment rights of free speech and As the First Amendment may association. prevent the government from prohibiting The Cochrans operate a small speech, it may also prevent the government commercial dairy farm with approximately from compelling individuals to express 150 cows on about 200 acres of land in certain views, Wooley v. Maynard, 430 Tioga County, north-central Pennsylvania. U.S. 705, 714 (1977); West Virginia State In contrast to ma ny larger-scale Bd. of Educ. v. Barnette, 319 U.S. 624, commercial dairy farms, the Cochrans 642 (1943), or pay subsidies for speech to employ what is known as “traditional” which individuals object, Keller v. State methods of dairy farming. Traditional Bar of California, 496 U.S. 1, 9-10 (1990); dairy farming is less aggressive than Abood v. Detroit Dep’t of Educ., 431 U.S. larger-scale commercial farming, as it 209, 234 (1977). allows cows more room to move and graze The Cochrans’ lawsuit named as and does not use the recombinant Bovine defendants Ann Veneman in her official Growth Hormone (rBGH). 2 The Cochrans capacity as Secretary of the United States believe that their methods result in Department of Agriculture (“USDA”) and healthier cows, a cleaner environment and the National Dairy Promotion Board, and superior milk. The Cochrans object to the sought declaratory and injunctive relief advertising under the Dairy Act because it from the remittance of compelled conveys a message that milk is a generic assessments by all dairy producers to product that bears no distinction based on finance generic dairy advertisements. Alleging that th e D air y A ct 2 unconstitutionally compels them to rBGH, also known as subsidize speech with which they disagree, recombinant bovine somatotropin the Cochrans filed a motion for summary (rBST), is a genetically engineered judgment contending that their case was growth hormone administered to dairy controlled by the teachings of United cows to boost milk production. States v. United Foods, Inc., 533 U.S. 405 Although the Food and Drug (2001), in which the Supreme Court held Administration has approved the use of that compelled subsidies under the rBGH for dairy production in the United Mushroom Promotion, Research, and States, consumer advocates and small Consumer Information Act of 1990 dairy producers have questioned the (“Mushroom Act”), 7 U.S.C. § 6101 et longterm effects of the growth hormone s e q ., vio l a t ed F i r s t A m e n d m e n t on humans, cows and the environment. protections. See Barnes v. Shalala, 865 F. Supp. 550, 554 (W.D. W is. 1994). The Government filed a motion to

dismiss or, in the alternative, for summary scrutiny. If these communications are judgment, arguing that this case is private speech, we must decide whether controlled by the teachings of Glickman v. the Dairy Act violates the First Wileman Brothers & Elliot, Inc., 521 U.S. Amendment free speech and association 457 (1997), in which the Supreme Court rights of dairy farmers. In doing so, we upheld compelled subsidies for advertising must consider the quantum of scrutiny to California tree fruit under two marketing be applied to determine the validity of orders issued pursuant to the Agricultural regulations, such as the Dairy Act, that Marketing and Agreement Act of 1937 compel commercial speech. (“AM AA”), 7 U.S.C. § 608c et seq. The For the reasons that follow we Government argued that the generic dairy reverse the judgment of the district court advertising subsidized under the Dairy Act and hold that the compelled speech constitutes “government speech” and is pursuant to the Dairy Act is private speech, therefore immune from First Amendment not government speech, and is therefore scrutiny and, moreover, that the Dairy Act subject to First Amendment scrutiny. We is a species of economic regulation that hold also that the Act violates the does not violate the First Amendment. 3 Cochrans’ First Amendment free speech The district court agreed with the and association rights by compelling them Government and granted summary to subsidize speech with which they judgment in its favor, holding that the disagree. In so doing we conclude that the Dairy Act survives the deferential First subsequent Supreme Court decisions of Amendment scrutiny afforded to economic Glickman in 1997 and United Foods in regulation. The Cochrans appeal. 2001 severely dilute the precedential We must decide whether the vitality of our ultimate holding in United challenged communications pursuant to States v. Frame, 885 F.2d 1119 (3d Cir. the Dairy Act are government speech and 1989), in which we concluded that the thereby immune from First Amendment compelled assessments pursuant to the Beef Promotion Research Act of 1985, 7 U.S.C. § 2901 et seq., survived First 3 Seven Pennsylvania dairy Amendment scrutiny. farmers who support the Dairy I. Promotion Act and Program petitioned the district court for leave to intervene as In determining the side on which defendants and the district court granted the axe must fall – on Glickman or on the petition for intervention under Rule United Foods – we must start by 24(a) of the Federal Rules of Civil examining why the Supreme Court went Procedure. The Intervenors filed a cross one way in its first case of Glickman and motion for summary judgment, echoing the other way in its subsequent decision the arguments made by the Government in United Foods. in its motion.

A. marketing orders for California fruit tree growers provided for mechanisms for In Glickman, producers of establishing uniform prices, limiting the California tree fruits (including quality and quantity of tree fruit that nectarines, plums and peaches) could be marketed, determining the grade challenged the constitutionality of and size of the fruit and orderly regulations contained in marketing orders disposing of any surplus. Id. at 461. The promulgated by the Secretary pursuant to orders also authorized joint research and the AMAA, 7 U.S.C. § 608c et seq., that development projects, quality inspection imposed mandatory assessments on fruit procedures and standardized packaging tree growers to cover the expenses requirements – all of which were associated with the marketing orders, financed by the compelled assessments. including the costs of generic Id. advertising. 521 U.S. at 460. The Court emphasized that besides the advertising The Court determined that the decisions, the economic autonomy of the collective arrangement of the fruit tree fruit tree growers was otherwise farmers was similar to the union restricted by a broader collective arrangement at issue in Abood v. Detroit arrangement set forth in the marketing Board of Education, 431 U.S. 209 orders: (1977), and the bar association at issue in Keller v. State Bar of California, 496 California nectarines and peaches U.S. 1 (1990). In Abood, the Court held are marketed pursuant to detailed that the infringement upon First marketing orders that have Amendment associational rights by displaced many aspects of compelled assessments for a union shop independent business activity that arrangement was “constitutionally characterize other portions of the justified by the legislative assessment of economy in which competition is the important contribution of the union fully protected by the antitrust shop to the system of labor relations laws. The business entities that established by Congress.” 431 U.S. at are compelled to fund the generic 222. Similarly, in Keller, the Court held advertising at issue in this that the infringement upon First litigation do so as part of a Amendment associational rights by broader collective enterprise in compelled assessments for a state bar which their freedom to act program was constitutionally justified by independently is already the State’s interest in regulating the legal constrained by the regulatory profession and improving the quality of scheme. legal services. 496 U.S. at 13. Finding Id. at 469. parallels between the facts of Abood and Keller, in Glickman the Court concluded In addition to advertising, the that as part of the AMAA marketing

orders, the compelled assessments for cases involving expression by groups generic advertising of California tree which include persons who object to the fruit were ancillary to a comprehensive speech, but who, nevertheless, must marketing program, and therefore were remain members of the group by law or “a species of economic regulation that necessity.” Id. at 413 (citing Abood, 431 should enjoy the same strong U.S. at 209; Keller, 496 U.S. at 1). The presumption of validity that we accord to Court concluded that the compelled other policy judgments made by assessments pursuant to the Mushroom Congress.” 521 U.S. at 477. Act were unlike the situation in Abood, Keller and Glickman, in which: “The opinion and the analysis of the Court [in Glickman] proceeded upon Those who were required to pay a the premise that the producers were subsidy for the speech of the bound together and required by the association already were required statute to market their products according to associate for other purposes, to cooperative rules. To that extent, their making the compelled mandated participation in an advertising contribution of moneys to pay for program with a particular message was expressive activities a necessary the logical concomitant of a valid scheme incident of a larger expenditure of economic regulation.” United Foods, for an otherwise proper goal 533 U.S. at 412. requiring the cooperative activity. B. Id. at 414. Four terms later, in United Foods Fundamentally, the Court noted the Court held that mandatory that “[w]e have not upheld compelled assessments imposed on mushroom subsidies for speech in the context of a producers for the purpose of funding program where the principal object is generic mushroom advertising under the speech itself.” Id. at 415. Concluding Mushroom Act, 7 U.S.C. § 6101 et seq., that the only program the compelled violated the First Amendment. 533 U.S. contributions for advertising pursuant to at 416. The Court distinguished the the Mushroom Act serve “is the very statutory context at issue in United Foods advertising scheme in question,” the from that in Glickman, explaining that Court ruled that the compelled under the stand-alone Mushroom Act assessments were not permitted under the “the compelled contributions for First Amendment. Id. at 416. advertising are not part of some broader C. regulatory scheme” and the advertising was itself the “principal object” of the Guided by the express reasoning Mushroom Act. Id. at 415. As such, of the Court in Glickman and United “the mandated support is contrary to the Foods, we must first look at the broader First Amendment principles set forth in statutory scheme presented in the Dairy

Act, or more specifically, we must Enacted in 1983, the Dairy Act ascertain whether the dairy producers are authorizes the Secretary of Agriculture to “bound together and required by the establish a program for the statute to market their products according “advertisement and promotion of the sale to cooperative rules” for purposes other and consumption of dairy products [and] than advertising, or speech. United for research projects related thereto.” 7 Foods, 533 U.S. at 412. It is to a U.S.C. § 4504(a). The declared purpose description of the Dairy Act we now of the Dairy Act is to provide for “an turn. orderly procedure for financing . . . and carrying out a coordinated program of promotion designed to strengthen the II. dairy industry's position in the marketplace . . . .” Id. § 4501(b). The Dairy Promotion Program set forth in the Dairy Act is one in a long The Dairy Act is a stand-alone series of federal “checkoff” programs for law that was not passed as part of any promoting agricultural commodities.4 other federal dairy regulatory scheme. It directs the Secretary to appoint a Dairy Board composed of private milk 4 Other stand-alone checkoff producers to administer the Dairy programs established by Congress which Promotion Program. Id. §§ 4504 (b) & have been subject to First Amendment (c). The Act provides that every milk challenges include: Beef Research and producer must pay a mandatory Information Act of 1976 (“Beef Act”), 7 assessment of 15 cents per U.S.C. § 2901 et seq. (invalidated by hundredweight of milk sold to finance Livestock Marketing Ass’n v. U.S. Dep’t the promotional programs and the Dairy of Agric., 335 F.3d 711 (8th Cir. 2003) Board’s administration of them. (reh’g den. Oct. 16, 2003)); Pork Pursuant to the authority provided Promotion, Research, and Consumer in 7 U.S.C. § 4503(a), the Secretary Information Act of 1985 (“Pork Act”), 7 issued an order in March 1984 U.S.C. § 4801 et seq. (invalidated by establishing the Dairy Board, 7 C.F.R § Michigan Pork Producers Ass’n, Inc. v. 1150.131, and the Board proceeded to Veneman, 348 F.3d 157 (6th Cir. 2003)); collect the mandatory assessments from Mushroom Act, 7 U.S.C. § 6101 et seq. all milk producers, 7 C.F.R § 1150.152. (invalidated in 2001 by United Foods, For the Cochrans, the compelled 533 U.S. at 405). Cf. Glickman, 521 assessments amount to roughly $3,500 to U.S. at 457 (upholding as constitutional $4,000 per year. marketing orders for California tree fruits promulgated pursuant to the AMAA, 7 U.S.C. § 608c et seq., which included compelled assessments to fund, among other things, generic advertising).

The Dairy Board is composed of Dairy Board and the DMI Board are commercial milk producers who are composed entirely of private milk nominated by “eligible associations,” producers and other private parties, and which are private associations of milk the Dairy Promotion Program is funded producers that engage in dairy promotion entirely by private milk producers at the state and regional level. Id. §§ through the compelled assessments. The 1150.133, 1150.273. The primary Dairy Promotion Program website consideration in determining an explains: “Checkoff programs are funded organization’s eligibility is “whether its by dairy producers – NOT membership consists primarily of milk TAXPAYERS. They are not producers who produce a substantial governmental programs; rather, they are volume of milk” and whose overriding businesses with governmental interests lay in the production and oversight.” 5 promotion of fluid milk and other dairy The Secretary’s oversight products. Id. § 1150.274(b). responsibilities pursuant to the Dairy Act In 1994, the Dairy Board created are conducted by the Agricultural Dairy Management, Inc. (“DMI”), a Marketing Service (“AMS”), a division District of Columbia corporation that of the USDA, and are limited to ensuring now oversees and administers the that the Dairy Promotion Program is in promotional activities of the Dairy Act. compliance with the Act. See, e.g., 7 DMI is a joint undertaking of the Dairy U.S.C. § 4507(a) (authorizing the Board and the United Dairy Industry Secretary to terminate an order issued Association (“UDIA”), which is an under the Act only when she determines association of state and regional dairy that it “obstructs or does not tend to promotional programs that are effectuate the declared policy of” the considered “Qualified Programs” under Act). AM S guidelines explain that “[i]t the Dairy Act. “Qualified Programs” are is the policy of AMS in carrying out the local promotional programs, many of oversight responsibility to ensure that which preexisted the Dairy Act, to which legislative, regulatory, and Department milk producers may contribute a portion policy requirements are met. It is not the of the money they would otherwise pay intent to impose constraints on board in assessments under the Act. See 7 operations beyond these requirements.” U.S.C. § 4504(g)(4), 7 C.F.R. §§ AMS, Guidelines for AMS Oversight of 1150.152(c), 1150.153. The Act thus Commodity Research and Promotion requires dairy farmers to pay either the full 15 cent per hundredweight assessment to the Dairy Program or part 5 Dairy checkoff Works! – How the to the Dairy Program and part to a Dairy Checkoff works, available at Qualified Program that engages in state http://www.dairycheckoff.com/howitworks. or regional generic advertising. The htm (last visited June 3, 2002 (J.A. at 231)).

Programs 1 (1994). The Secretary’s bound together and obligated by statute oversight functions for the Dairy to market their products according to Program are funded by the compelled some set of cooperative rules. The assessments. 7 U.S.C. § 4504(g)(2); 7 district court held that such a cooperative C.F.R. § 1150.151(b). Moreover, the arrangement exists for dairy producers, dairy producers, not the government, but we conclude otherwise. control whether the Dairy Promotion A. Program continues via a referendum process. 7 U.S.C. § 4506(a). The AMAA, 7 U.S.C § 608c, permits the Secretary to issue marketing All advertising and promotional orders that regulate the handling and programs that are financed by the sales of various agricultural compelled assessments under the Dairy commodities, including milk, in different Act and created by the Dairy Board and regions of the country. For milk, the DM I promote milk as a generic product. marketing orders establish a 7 C.F.R. § 1150.114. Among classification system and set minimum advertising campaigns financed by the prices that handlers must pay in the Dairy Promotion Program are “Got milk? regions in which the orders apply. See 7 ®” and “Ahh, the power of cheese.” U.S.C. § 608c(5); 7 C.F.R. § 1000.1 et seq. The AM AA applies only to “handlers”6 of the covered commodities. III. 7 U.S.C. §§ 608c(1) & (5)(A). In addition to the Dairy Act, the “Producers,” such as dairy farmers in dairy industry is subject to a patchwork general, and Joseph and Brenda Cochran of federal and state regulatory laws. The in particular, are specifically exempted district court noted four federal laws in from the application of marketing orders. particular that it deemed relevant to this Id. § 608c(13)(B) (stating that no case: (1) the Agricultural Marketing marketing order “shall be applicable to Agreement Act of 1937 (“AM AA”), 7 any producer in his capacity as a U.S.C. § 608c et seq.; (2) the Agriculture producer”). Act of 1949, 7 U.S.C. § 1446; (3) import Although milk marketing orders control regulations under 19 U.S.C. § restrict the decisions of dairy handlers, 1202; and (4) the Capper-Volstead Act, 7 they do not interfere with the decisions U.S.C. § 291. of dairy producers, such as the Cochrans, An examination of the provisions of these statutes is crucial to determine 6 whether these legislative acts, in A handler is a person who conjunction with the Dairy Act, bring the purchases milk from a producer in an case at bar within the rubric of Glickman unprocessed form for the purpose of – i.e., requiring that milk producers are processing it.

with regard to how much milk to the Cochrans, however, are not covered produce, sell or whether they must sell by the Agricultural Act and are not milk at all to dairy handlers. See id. § permitted to sell their product to the 608c(5).7 At least 25 percent of the milk government under the price support sold in the United States is sold outside program. of federal milk marketing orders. The C. Cochrans are able to and do sell much of their milk outside any milk marketing Similarly, the import control order. regulations under Chapter 4 of the Harmonized Tariff Schedule of the B. United States, 19 U.S.C. § 1202, subject The Agricultural Act of 1949, 7 a multitude of commodities and products U.S.C. § 1446, establishes a price to annual import quotas. Although support program wherein manufacturers certain dairy products are included – and processors of cheese, nonfat dry milk namely butter, dry milk and cheese – and butter can sell those products to the fluid milk is not. See 7 C.F.R. Pt. 6, federal government as buyer of last Apps. 1, 2, 3. resort. Producers of fluid milk, such as D.

7 Finally, the Capper-Volstead Act, Milk marketing orders under the 7 U.S.C. § 291, permits producers of AMAA are implemented on a regional agricultural products – including milk, basis. See 7 U.S.C. § 608c(11). Not all mushrooms and others – to enter into parts of the country are covered, and manufacturing and marketing some states – including California, cooperatives without fear of violating Virginia, Maine and M ontana – are antitrust laws. It does not, however, outside the territory of any milk require producers to enter into such marketing order. Portions of cooperatives, as federal law expressly Pennsylvania fall within two different protects producers’ freedom not to join milk marketing regions, the Northeast any cooperative. See Agricultural Fair Area and the M ideast Area. See 7 C.F.R. Practices Act of 1967, 7 U.S.C. § 2301 et §§ 1001.1, 1033.1. Certain portions of seq.; Michigan Canners & Freezers the state, however, including where the Ass’n, Inc. v. Agric. Mktg. & Bargaining Cochrans are located, fall outside of any Bd., 467 U.S. 461, 477-478 (1984). The federal milk marketing order. The effect Cochrans do not belong to any of the AMAA provisions is that any cooperatives protected by the antitrust particular producer’s milk is subject to a exemption created by the Capper- marketing order only if the producer Volstead Act. chooses to sell to a regulated handler in an area covered by a marketing order. E. See id. §§ 1001.13, 1033.13.

Considering the foregoing expressed when [the government] is the provisions of the Dairy Act and other speaker or when [the government] enlists statutes governing the dairy industry, we private entities to convey its own now turn to the First Amendment issues message.” Rosenberger v. Rector & that constitute the heart of this appeal.8 Visitors of the Univ. of Virginia, 515 U.S. 819, 833 (1995). The Court has not decided IV. whether speech generated under We must first consider whether commodity promotion laws such as the the compelled assessments generated Dairy Act constitutes government speech under the Dairy Act constitute private or and is thereby immune from First government speech. Although the Amendment scrutiny.9 But in Frame, this district court did not address this issue, court did meet the issue. 885 F.2d at the Government contended before the 1132-1133. district court that the expressions In line with our sister Courts of generated under the Dairy Act constitute Appeals in Michigan Pork Producers government speech. Therefore, the issue Ass’n, Inc. v. Veneman, 348 F.3d 157, is subject to our review. 161-162 (6th Cir. 2003) and Livestock The First Amendment prohibits Marketing Ass’n v. U.S. Dep’t of Agric., the government from regulating private 335 F.3d 711, 720 (8th Cir. 2003), we speech based on its content, but the Court held that the Beef Promotion Program has “permitted the government to was not government speech because it regulate the content of what is or is not required only beef producers to fund it and it attributed the advertising under the 8 program to the beef producers. Frame, The United States District Court 885 F.2d at 1132-1133. Recognizing that for the Middle District of Pennsylvania the Beef Promotion Program directed the had jurisdiction pursuant to 28 U.S.C. § 1331 based on the Cochrans’ First 9 Amendment claim. We have jurisdiction The two decisions of the Court in this timely appeal pursuant to 28 involving commodity promotion U.S.C. §§ 1291. We review de novo the programs do not address the issue of constitutionality of an Act of Congress. government speech. In Glickman, the Dyszel v. Marks, 6 F.3d 116, 123 (3d Secretary of Agriculture waived the issue Cir. 1993). Similarly, our review of the by not pursuing it before the Supreme district court's granting of judgment on Court. 521 U.S. at 482 n.2 (Souter, J., the pleadings and summary judgment is dissenting). In United Foods, the Court plenary. Anker Energy Corp. v. refused to address the issue because the Consolidation Coal Co., 177 F.3d 161, government failed to raise it before the 169 (3d Cir. 1999). Court of Appeals. 533 U.S. at 416-417.

Secretary to appoint all Cattlemen Board Secretary’s supervisory responsibilities members and approve all budgets, plans, are not sufficient to transform the dairy contracts and projects entered into by the industry’s self-help program into Board, this court nevertheless concluded “government speech.” On the dairy that “[t]he Secretary’s extensive checkoff website, the government itself supervision . . . does not transform this describes the Dairy Promotion Program self-help program for the beef industry as a non-governmental program, into ‘government speech.’” We financed and directed by dairy farmers. explained: Although this court’s First The Cattlemen’s Board seems to Amendment discussion and ultimate be an entity “representative of one holding in Frame have been abrogated by segment of the population, with Glickman and United Foods, none of the certain common interests.” Court’s subsequent decisions regarding Members of the Cattlemen’s “government speech” undermine our Board and the Operating analysis of that issue in Frame.10 Committee, though appointed by the Secretary, are not government officials, but rather, individuals 10 Notwithstanding the from the private sector. The pool Government’s assertions to the contrary, of nominees from which the we are not convinced that any decisions Secretary selects Board members, rendered by the Court in the years moreover, are determined by following our decision in Frame require private beef industry us to cast aside the government speech organizations from the various analysis we performed in Frame. See states. Furthermore, the State Legal Servs. Corp. v. Velazquez, 531 organizations eligible to U.S. 533 (2001) (concluding that participate in Board nominations restrictions placed on the private speech are those that “have a history of of a lawyer receiving government stability and permanency,” and funding from the Legal Services whose “primary or overriding Corporation were unconstitutional); Bd. purpose is to promote the of Regents of the Univ. of Wis. Sys. v. economic welfare of cattle Southworth, 529 U.S. 217 (2000) (stating producers.” in dicta, in a case where the government Id. at 1133 (quoting 7 U.S.C. § affirmatively disavowed any connection 2905(b)(3) & (4)). The government’s to the speech involved, that a role in the Dairy Promotion Program is in government speech analysis might apply all material respects the same as it was in if a state university used general tuition the Beef Promotion Program, and under money to fund speech attributed to the the precedent established in Frame, the school or its administrators); Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374

Accordingly, we conclude that this is a expressive associations with which they private speech case, and thus is not disagree. See United Foods, 533 U.S. at immune from First Amendment scrutiny. 411. “First Amendment values are at serious risk if the government can V. compel a particular citizen, or a discrete The teachings of United Foods group of citizens, to pay special subsidies require us to decide whether the dairy for speech on the side that it favors . . . . producers are “bound together and As a consequence, the compelled funding required by the statute to market their for the advertising must pass First products according to cooperative Amendment scrutiny.” Id. The rules[,]” 533 U.S. at 412, for purposes individual’s disagreement can be minor, other than advertising, or speech. That as “[t]he general rule is that the speaker is our next task. and the audience, not the government, assess the value of the information The Cochrans contend that the presented.” Id. (quoting Edenfield v. Dairy Act violates their First Amendment Fane, 507 U.S. 761, 767 (1993)). When, free speech and association rights by however, regulation compelling funding compelling them to subsidize generic for speech is ancillary to a broader advertising that promotes milk produced collective enterprise that otherwise by methods they view as wasteful and restricts the individual’s market harmful to the environment. autonomy, it is considered “economic The First Amendment protects the regulation,” which enjoys a “strong right to refrain from speaking and the presumption of validity” when facing a right to refrain from association. See, First Amendment challenge. See e.g., Wooley, 430 U.S. at 714. Glickman, 521 U.S. at 477. Moreover, the government may not We conclude that in upholding as compel individuals to fund speech or constitutional the compelled subsidies under the Dairy Act, the district court (1995) (holding that Amtrak is a misapplied Glickman and misconstrued government actor for First Amendment the effect of the “entire regulatory purposes because it was created by scheme applicable to milk producers . . . statute to further government objectives .” (District Court Op. at 15 n. 5.) The and the government maintained Court in United Foods made clear that substantial control over its daily Glickman applied only in circumstances operations); Rust v. Sullivan, 511 U.S. similar to Abood and Keller – in which 173 (1991) (concluding that the individuals are “bound together” in a government can prevent private doctors collective enterprise, such as a union or at family planning clinics that receive an integrated state bar, and the compelled federal funding from providing abortion subsidies are the “logical concomitant of counseling). a valid scheme of economic regulation.”

533 U.S. at 412. scale dairy producers, the Cochrans are exempted from the regional marketing The provisions of the Dairy Act orders under the AMAA and have chosen do not require milk producers to not to enter into manufacturing and participate in a collective enterprise and marketing cooperatives. They, and they do not compel them to market their alone, determine how much milk to product, fluid milk, according to any produce, how to sell and market it and to rules of a cooperative. Although the whom it will be sold. Nevertheless under dairy industry is “regulated” in the sense the Dairy Act they are compelled to pay that it is subject to a patchwork of state assessments to subsidize generic dairy and federal laws, there is no association advertising, a form of speech with which that all milk producers must join that they are in total disagreement. Cf. would make the entire industry Glickman, 521 U.S. at 471 (noting that analogous to a union, an integrated bar or “none of the generic advertising conveys the collective enterprise at issue in any message with which respondents Glickman. disagree”). The Dairy Act is a free-standing Furthermore, as the Court in promotional program that applies to all United Foods determined that speech is dairy producers regardless of whether the principal purpose of the Mushroom they are subject to marketing orders or Act, so it is of the Dairy Act. 11 Indeed, any other dairy regulations. It is not ancillary to any collective enterprise or compelled association with a non-speech 11 purpose because there is no such Congress’ declared policy of the enterprise or association for milk that Mushroom Act was encompasses all dairy producers. Indeed, the AMAA provision for milk marketing that it is in the public interest to orders, which preexisted the Dairy Act, authorize the establishment, authorizes the Secretary and marketing through the exercise of the powers administrators to create dairy provided in this chapter, of an promotional programs that literally orderly procedure for developing, would be ancillary to the regulatory financing through adequate aspects of the milk marketing orders. assessments on mushrooms See 7 U.S.C. 608c(5)(I). Congress chose produced domestically or not to utilize this precise provision of the imported into the United States, AMAA, however, and instead adopted an and carrying out, an effective, entirely separate program which does not continuous, and coordinated operate in concert with any collective program of promotion, research, aspect of any milk marketing order. and consumer and industry information designed to – (1) Moreover, as independent small- strengthen the mushroom

“almost all of the funds collected under Amendment free speech and the mandatory assessments are for one associational rights issue. But our purpose: generic advertising.” United determination that the Act’s compelled Foods, 533 U.S. at 412. In United assessments for generic advertising Foods, the Court made clear that implicate the Cochrans’ First compelled subsidies may not be upheld Amendment rights does not end our where they are only germane to a inquiry. As this court held in Frame, program whose “principal object is “[t]he rights of free speech and speech itself.” Id. at 415. association are not absolute. Thus, we must next identify the proper standard for We conclude, therefore, that being evaluating whether the statute . . . compelled to fund advertising pursuant nevertheless passes constitutional to the Dairy Act raises a First muster.” 885 F.2d at 1133.12

industry’s position in the 12 marketplace; (2) maintain and Upon concluding that milk expand existing markets and uses producers are regulated to a similar for mushrooms; and (3) develop degree as the California tree fruit new markets and uses for growers in Glickman, the district court mushrooms. applied a three-part test set forth by the Supreme Court in Glickman: (1) whether 7 U.S.C. § 6101(b). Congress’ declared the Act imposes a restraint on the purpose for the Dairy Act is freedom to communicate; (b) whether the Act compels any person to engage in any that it is in the public interest to actual or symbolic speech; (c) whether authorize the establishment . . . of the Act compels dairy producers to an orderly procedure for financing endorse or finance any political or (through assessments on all milk ideological views. (District Court Op. at produced in the United States for 16-18.) This test, however, is commercial use and on imported inappropriate because, like the Supreme dairy products) and carrying out a Court in United Foods, we have coordinated program of promotion concluded that the Dairy Act is not a designed to strengthen the dairy species of economic regulation, as it is industry’s position in the not ancillary to a more comprehensive marketplace and to maintain and program restricting the marketing expand domestic and foreign autonomy of dairy farmers. In United markets and uses for fluid milk Foods the Court did not apply this three- and dairy products. part test. Nor do we.

7 U.S.C. § 4501(b).

VI. be designed carefully to achieve the State’s goal.” 447 U.S. at 564. This case is properly characterized Commercial speech is “expression as a compelled commercial speech case. related solely to the economic interests of See United Foods, 533 U.S. at 410; the speaker and its audience.” Id. at 561. Frame, 885 F.2d at 1146 (Sloviter, J., dissenting). The Supreme Court, But the Court has left open the however, has left unresolved the standard question of whether Central Hudson’s for determining the validity of laws more relaxed First Amendment test compelling commercial speech, and the applies to cases involving compelled circuit courts are divided on the issue. commercial speech. In United Foods the There are at least four variations in the Court stepped back from addressing the judiciary’s cumulative experience. One issue in ipsis verbis, explaining: “the is the more lenient standard applied to Government itself does not rely upon commercial speech cases. See Central Central Hudson to challenge the Court of Hudson Gas & Elec. Corp. v. Pub. Serv. Appeals’ decision, . . . and we therefore Comm’n, 447 U.S. 557, 564 (1980). do not consider whether the Another is the “germaneness” test of Government’s interest could be compelled speech cases. See, e.g., considered substantial for purposes of the Abood, 431 U.S. at 235-236. Still Central Hudson test.” 533 U.S. at 410. another is an adaptation of the Nevertheless, in the earlier case of commercial speech standard. See Glickman, the Court questioned the Livestock Marketing, 335 F.3d at 722- application of the commercial speech test 723. And, in Frame, a pre-Glickman and to compelled speech cases: pre-United Foods case, this court applied The Court of Appeals fails to the stringent level of scrutiny for explain why the Central Hudson associational rights cases. 885 F.2d at test, which involved a restriction 1134. We now summarize the various on commercial speech, should standards. govern a case involving the A. compelled funding of speech. Given the fact that the Court of In Central Hudson, the Supreme Appeals relied on Abood for the Court held that to evaluate the proposition that the program constitutionality of regulatory restrictions implicates the First Amendment, it on commercial speech the Constitution is difficult to understand why the requires only intermediate scrutiny – Court of Appeals did not apply namely, that (1) the state must “assert a Abood’s “germaneness” test. substantial government interest”; (2) “the regulatory technique must be in 521 U.S. at 474 n. 18. proportion to that interest”; and (3) the Indeed, in United Foods, incursion on commercial speech “must

notwithstanding its specific disclaimer under the Dairy Act are germane to regarding Central Hudson, the Court nothing but the speech itself. “[A]lmost seemingly applied the “germaneness” all of the funds collected under the test: mandatory assessments are for one purpose: generic advertising.” Id. at 412. The only program the It would thus seem that the Dairy Act Government contends the would not survive Abood’s germaneness compelled contributions serve is test. the very advertising scheme in question. Were it sufficient to say Other courts have applied the speech is germane to itself, the germaneness test to cases involving limits observed in Abood and compelled assessments pursuant to Keller would be empty of promotional programs and have rejected meaning and significance. The the application of Central Hudson. See, cooperative marketing structure e.g., Michigan Pork, 348 F.3d at 163 relied upon by a majority of the (noting that “[e]ven assuming that the Court in Glickman to sustain an advertising funded by the [Pork] Act is ancillary assessment finds no indeed commercial speech, the more corollary here; the expression lenient standard of review applied to respondent is required to support limits on commercial speech has never is not germane to a purpose been applied to speech – commercial or related to an association otherwise – that is compelled”); In re independent from the speech Washington State Apple Adver. itself; and the rationale of Abood Comm’n, 257 F. Supp. 2d 1274, 1287 extends to the party who objects (E.D. Wash. 2003) (concluding that to the compelled support for this “[b]ecause the Commission’s speech. For these and other assessments do not restrict speech, it is reasons we have set forth, the inappropriate to apply the Central assessments are not permitted Hudson test for restrictions on under the First Amendment. commercial speech”). 533 U.S. at 415-416 (emphasis added). In Livestock Marketing, however, the Eighth Circuit concluded that an As we previously explained, the adaptation of the Central Hudson test purpose of the Dairy Act is in all material applied, explaining that “Central Hudson respects the same as that of the and the case at bar both involve Mushroom Act at issue in United Foods, government interference with private and the Dairy Act is not ancillary to a speech in a commercial context.” 335 broader cooperative marketing regime F.3d at 722. All the same, the court like the fruit tree marketing orders at concluded that the Beef Act did not issue in Glickman. The compelled survive the intermediate scrutiny of assessments for generic dairy advertising

Central Hudson. Id. at 725-726. Relying Court in evaluating the on the reasoning set forth in United permissibility of regulation of Foods, the court determined that the beef commercial speech [in Central checkoff program is in all material Hudson] . . . . While the respects identical to the mushroom government has a general interest checkoff program, and concluded that in the health of the beef industry, “the government’s interest in protecting it does not follow that the the welfare of the beef industry by government has a substantial compelling all beef producers and interest in compelling the beef importers to pay for generic beef industry to make and support such advertising is not sufficiently substantial a promotion campaign. Instead, . . to justify the infringement on appellees’ . the messages represent the First Amendment free speech right.” Id. economic interests of one segment of the population . . . . Finally, in Frame, which was decided before the teachings of both Id. at 1146-1147 (Sloviter, J., dissenting) Glickman and United Foods, this court (citations and internal quotations applied the stringent associational rights omitted). standard but nevertheless upheld the As in Frame, the Government here constitutionality of the Beef Act, 7 argues that it has a sufficient interest in U.S.C. § 2901 et seq. Back in 1989, this increasing the demand for an agricultural court concluded that the government’s product. Moreover, the Government interest in “maintaining and expanding contends that it has an interest in beef markets proves . . . compelling[,]” decreasing its obligation to purchase and “[m]aintenance of the beef industry dairy products under the price support ensures preservation of the American program, 7 U.S.C § 1446. We previously cattlemen’s traditional way of life.” have emphasized, however, that the Frame, 885 F.2d at 1134-1135 (citations Court’s subsequent holding in United omitted). Foods that clarified and limited the Judge Sloviter, however, teachings of Glickman, cut away the dissented on this issue in Frame: underpinning of this court’s analysis in Frame. United Foods makes clear that I doubt that the type of compelled the government may not compel speech at issue here can be individuals to support an advertising justified on any basis. program for the sole purpose of Nonetheless, I do not reach the increasing demand for that product. 533 majority’s stringent associational U.S. at 415. In United Foods, the Court rights standard because I believe concluded that the Mushroom Act’s that no justification can be found, compelled subsidies would be even under the less exacting unconstitutional even under the lesser criteria adopted by the Supreme

scrutiny accorded to commercial speech. B. Id. at 410. In light of the reluctance of the Although the Government’s Supreme Court in United Foods to enter contention that it has a substantial the controversy over the applicable interest in decreasing its obligation under scrutiny for compelled commercial the dairy price support program is speech cases, however, we will follow somewhat unique from the government suit. “[W]e find no basis under either interest asserted in United Foods, this Glickman or our other precedents to interest is undermined by the fact that as sustain the compelled assessments sought a stand-alone statute, the Dairy Act does in this case.” 533 U.S. at 410.13 not operate in conjunction with the price The compelled assessments for support program. Indeed, producers of generic dairy advertising under the Dairy liquid milk such as the Cochrans are not Act relate to speech and only to speech. covered by the support program. Indeed, “almost all of the funds collected Moreover, reductions in the under the mandatory assessments are for government’s obligations under the price one purpose: generic advertising.” Id. at support program are insignificant to the 412. Dairy Promotion Program’s existence, as whether the compelled assessments Measured by any degree of continue is controlled by the dairy scrutiny set forth in the foregoing producers via the referendum process. 7 discussion, we conclude that this case U.S.C. § 4506(a). runs on all fours with the teachings and holding of United Foods, and We conclude, therefore, that the accordingly hold that the Dairy government’s interest in promoting the Promotion Stabilization Act of 1983 does dairy industry is not sufficiently not survive the First Amendment substantial to justify the infringement on challenge lodged by Appellants Joseph the Cochran’s First Amendment free and Brenda Cochran. The district court speech and association rights. As Judge erred in sustaining the constitutionality Sloviter suggested in her dissent in of the Dairy Act on the basis of Frame, promotional programs such as the Glickman. Dairy Act seem to really be special interest legislation on behalf of the ***** industry’s interest more so than the government’s. We believe that the 13 Supreme Court reached the same We reach this conclusion conclusion by ruling in United Foods that whether accepting the standard explicitly the compelled assessments pursuant to expressed in Frame or deciding that in the Mushroom Act are not permitted by view of the Court’s discussion in United the First Amendment. Foods, that standard is not longer controlling.

In sum, we conclude that the at Part VI-A. Twice – in both Glickman generic advertising pursuant to the Dairy and United Foods – the Supreme Court has Promotion Stabilization Act of 1983 does questioned the need for engaging in a not constitute government speech and is Central Hudson analysis.14 And, I think it therefore subject to First Amendment scrutiny. We hold that the Dairy Act 14 violates the Cochrans’ First Amendment The Court has not treated these free speech and associational rights. cases as involving a discrete commercial speech issue, instead indicating that “[t]he Although the dairy industry may be question is whether the government may subject to a labyrinth of federal underwrite and sponsor speech with a regulation, the Dairy Act is a stand-alone certain viewpoint using special subsidies law and the compelled assessments for exacted from a designated class of persons, generic dairy advertising are not germane some of whom object to the idea being to a larger regulatory purpose other than advanced.” United Foods, 533 U.S. at 410; the speech itself. see also id. (stating that, even if commercial speech is less protected than other speech, The judgment of the district court there is “no basis under either Glickman or sustaining the constitutionality of the our other precedents to sustain the Dairy Promotion Stabilization Act of compelled assessments,” but refusing to 1983 will be reversed and the proceedings consider “whether the Government’s interest remanded with a direction to enter a could be considered substantial for purposes decree in favor of Appellants in of the Central Hudson test”); Glickman, 521 accordance with the foregoing. U.S. at 474 & n.18 (noting that it was “error for the [Ninth Circuit] to rely on Central Hudson for the purpose of testing the RENDELL, Circuit Judge, concurring. constitutionality of market order assessments for promotional advertising,” and stating that the Ninth Circuit “fails to explain why the Central Hudson test, which I join in our opinion and judgment involved a restriction on commercial speech, but write separately to register my view should govern a case involving the that, having found that the assessments do compelled funding of speech”). In fact, in not pass muster under the Supreme Court’s United Foods the Court appears to explicitly analysis in United Foods, and, having noted endorse the applicability of the at the end of Pat IV that the compelled Abood/Keller germaneness test: “It is true subsidies were assessed to support a that the party who protests the assessment program whose principal object was speech here is required simply to support speech by itself, we need not engage in the exercise of others, not to utter the speech itself. We determining the “standard” regarding the conclude, however, that the mandated support is contrary to the First Amendment extent of the government’s interest for principles set forth in cases involving purposes of a commercial speech analysis expression by groups which include persons under Central Hudson, as the opinion does who object to the speech, but who,

unnecessary to apply Central Hudson in Second, is the assessment regulation light of the Court’s analysis in United related to and in furtherance of other non- Foods.15 speech purposes, carrying out other aspects to further other economic, societal, or In United Foods the Court governmental goals? Id. at 415. Even if distinguished the situation it faced from the the answer to the first question is “no,” the one it considered in Glickman by assessment might nonetheless be permitted examining the following question: Is the if it is not only related to speech. This challenged assessment part of a “broader second inquiry could signal consideration regulatory system” that does not have of “germaneness” if, in fact, other goals speech as its primary object. 533 U.S. at were implicated. But here, we answered 415. There appear to be two parts to this “no” to both questions: we decided that the basic inquiry. First, are the plaintiffs part Cochrans did not surrender their freedom of a group that is “bound together and to make independent competitive choices required . . . to market their products to any collective enterprise, and we according to cooperative rules?” Id. at 412. concluded that speech was the only purpose of the Dairy Act. Thus, it was purely “compelled speech,” forbidden by nevertheless, must remain members of the United Foods under any level of scrutiny. group by law or necessity.” 533 U.S. at 413 533 U.S. at 410. In fact, after discussing (citing Abood and Keller). the various standards potentially applicable 15 The Sixth Circuit, in Michigan Pork here, Judge Aldisert clearly states in the Producers Ass’n, Inc. v. Veneman, 348 F.3d ensuing Part VI-B that under any level of 157 (6th Cir. 2003), also rejected the scrutiny, the assessments for speech only application of the Central Hudson test to an do not pass constitutional muster given assessment created by a similar promotional United Foods. The analysis in Part VI-A program. I find that court’s comments on this regarding the proper level of scrutiny is matter to be instructive: “[W]e find therefore unnecessary, and, I believe, inapplicable to this case the relaxed scrutiny dicta. of commercial speech analysis provided for by Central Hudson, and relied upon by Appellants. The Pork Act does not directly limit the ability of pork producers to express a message; it compels them to express a message with which they do not agree. Even assuming that the advertising funded by the Act is indeed commercial speech, the more lenient standard of review applied to limits on commercial speech has never been applied to speech – commercial or otherwise – that is compelled. It is one thing to force someone to close her mouth; it is quite another to force her to become a mouthpiece.” Id. at 163 (citation omitted).