Michigan Firm Challenges Tart Cherry Rules

(CN) - A Michigan company that makes cherry pie filling claims in court that U.S. Agriculture Department rules forcing it to keep millions worth of its product off store shelves are unfair and unconstitutional.

In a complaint filed in Grand Rapids, Mich. Federal Court on Jan. 11, Burnette Foods claims the Agriculture Department and unlawfully restrict the amount of Michigan tart cherries that go to market, while holding other states to much looser standards.

Burnette Foods, a Michigan company, produces canned fruit and vegetable products, and specializes in cherry and apple pie fillings.

Michigan grows about 75 percent of the nation's tart cherry crop.

The Cherry Industry Administrative Board, under the auspices of the Agriculture Department, sets restrictions on the percentage of the U.S. tart cherry crop that can be sold each year.

In 2014, the required reserve amount was 10 percent, but some years it has been as high as 68 percent of a handler's production.

Michigan tart cherry growers are subject to more restrictions than others, in part due to concern that the concentration of the cherry harvest in one small part of the state means that one bad year could devastate the domestic industry.

A Cornell University study found that the government regulations help Michigan growers get a better price for their cherries.

There are no restrictions on Oregon or Pennsylvania tart cherry growers, or any sweet cherry growers. In addition, foreign tart cherry producers are not bound by the agency's cherry order, and the amount of imported tart cherry products sold in the U.S. is not considered in the calculation of the restrictions placed on domestic handlers, according to the complaint.

Burnette is asking a federal judge to hold the Board's cherry restrictions unconstitutional.

The company says the Board is dominated by members of CherrCo, a cooperative that produces primarily frozen cherry products, whereas Burnette uses fresh cherries - and therefore, it has a much harder time holding its product off the market.

Burnette allegedly has $3 million worth of unsalable inventory with a limited shelf life.

It previously sought, and initially won, a modification of the cherry order to exempt canned cherry products from the same restrictions as frozen cherry products.

Administrative Law Judge Jill Clifton ruled that "the requirement that a canner withhold from the market the same percentage as handlers who freeze (for example), is contrary to law because it is confiscatory; the tart cherries processed into metal cans cannot be stored and carried over from crop year to crop year. The frozen tart cherries can be stored and carried over from crop year to crop year."

But a judicial officer overturned this ruling and reimposed the limits on Burnette's sales.

Burnette asked the court to reinstate Clifton's decision, and to rule the Agriculture Department's cherry order unconstitutional because it does not take imported cherries into consideration.

"Failing to include imported tart cherry products in the Optimum Supply Formula or considering them in determining volume restrictions renders the Optimum Supply Formula, and the Tart Cherry Order itself, contrary to law because it results in disorderly and discriminatory marketing conditions," the cherry producer says.

Burnette also challenges Clifton's finding that CherrCo does not qualify as a sales constituency.

"The evidence presented at the hearing showed CherrCo's activities go well beyond the actions of a mere consignee of cherries and CherrCo does in fact direct where cherries are sold," the company says.

It continues, "Because CherrCo's members produce primarily frozen tart cherry products, allowing the sales constituency, CherrCo, to dominate the CIAB essentially allows the frozen segment of the tart cherry industry to dominate the tart cherry industry."

The case bears many similarities to a case brought by California raisin growers against federal rules requiring a share of grower's harvest be kept in reserve.

The Supreme Court ruled against the government last year on Fifth Amendment grounds, finding that the "the reserve requirement imposed by the Raisin Committee is a clear physical taking."

Burnette is represented by James Rosloniec with Verity Law in Grand Rapids, Michigan.

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