New Life to Suit Over California Raisin Crops

WASHINGTON (CN) - California raisin growers should have been allowed to advance their challenge to a Depression-era law that requires them to put a portion of their crop in a federal reserve pool, the Supreme Court ruled Monday.

Nearly mirroring a 1938 dispute involving walnuts, the raisin case pits the U.S. government against growers Marvin and Laura Horne and the Raisin Valley Marketing Association, a coalition of 61 raisin growers in Fresno and Madera Counties.

Both cases involve dissatisfaction with federal marketing rules that direct a share of every grower's annual harvest to a crop-specific committee, which then sells the reserves for export or donates them to school-lunch programs or foreign governments. The Department of Agriculture began the program in the late 1930s under the Agricultural Marketing Agreement Act (AMAA), hoping it would stabilize commodity prices, market disequilibrium and the nation's floundering credit system.

The Hornes, who have grown raisins in California since 1969, tried to circumvent the law in 2001 by cutting out the middle man, buying packaging equipment and contracting with 60 local farms to stem, clean and sort their raisins. They became "producers" instead of "handlers," they argued. Reasoning that reserve requirements applied only to handlers, they said they should no longer have to contribute. The federal Raisin Administrative Committee did not agree and imposed nearly $700,000 in fines.

The committee also rejected the Hornes' claim that the reserve rule violated the Fifth Amendment's takings clause, which prohibits the federal government from seizing personal property without compensation. The Hornes sued the Department of Agriculture in Fresno, Calif., but U.S. District Court Judge Lawrence O'Neill upheld the committee's rulings and determined that the fines were not excessive.

The 9th Circuit affirmed in July 2012, finding jurisdiction improper since the takings argument should have been brought before the U.S. Court of Federal Claims.

Reversing that decision Monday, the unanimous Supreme Court said that the Hornes' takings claim "was properly before the court because the AMAA provides a comprehensive remedial scheme that withdraws Tucker Act jurisdiction over takings claims brought by raisin handlers."

"Petitioners (as handlers) have no alterna­tive remedy, and their takings claim was not 'premature' when presented to the Ninth Circuit," Justice Clarence Thomas wrote for the court (parentheses in original).

The Hornes also had room to raise a takings-based defense as a handler in the context of an enforcement proceeding initiated by the USDA, according to the ruling.

"In the case of an administrative enforcement proceed­ing, when a party raises a constitutional defense to an assessed fine, it would make little sense to require the party to pay the fine in one proceeding and then turnaround and sue for recovery of that same money in another proceeding," Thomas added. "We see no indication that Congress intended this result for handlers subject to enforcement proceedings under the AMAA. Petitioners were therefore free to raise their takings-based defense before the USDA. And, because §608c(14)(B) allows a handler to seek judicial review of an adverse order, the district court and Ninth Circuit were not precluded from reviewing petitioners' constitutional challenge. The grant of jurisdiction necessarily includes the power to review any constitutional challenges properly presented to and rejected by the agency. We are therefore satisfied that the petitioners raised a cognizable takings defense and that the Ninth Circuit erred in declining to adjudicate it."

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