Ohio Dairy Loses Fight Against Wisconsin Butter Law

CHICAGO (CN) – The Seventh Circuit upheld a Wisconsin law that requires all butter sold in the state to be graded, rejecting an artisanal dairy maker’s claim that the government has no business setting flavor standards for butter.

“Because it is reasonable to conclude that mandatory butter‐grading will give consumers relevant product information and promote commerce, the statute survives rational‐basis review,” U.S. Circuit Judge Joel Flaum wrote in Wednesday’s ruling.

Ohio-based Minerva Dairy makes artisanal, small-batch Amish butter and cheeses, but its butter does not qualify for Wisconsin’s highest butter grade – AA – based on state-set standards for taste, color, uniformity and body.

The dairy argued that the state has no right to enforce an “antiquated” statute that allegedly interferes with interstate commercial butter sales. The law at issue, Wis. Stat. § 97.176, says it is unlawful to sell “any butter at retail unless it has been graded” by specific standards.

At oral arguments, Minerva told the court that it makes no sense that the big conglomerate Land O’Lakes’ butter scores AA, but the popular Irish butter Kerrygold, which many consumers prefer for its taste and is comparable to Minerva’s product, scores just an A.

Wisconsin grades butter as AA, A, B or undergrade. But no matter how it’s graded, any butter can still be sold in the state as long as it has undergone the grading process.

“The government has no interest in informing consumers whether [a] product pleases the government,” Minerva’s attorney Anastasia Boden, a staff attorney with the libertarian public interest law firm Pacific Legal Foundation, told the appeals court panel last month.

But the three-judge panel led by Judge Flaum found, “The state has presented some evidence that (1) the industry standards reflect dominant consumer preferences, and (2) the butter‐grade statute effectively conveys those preferences.”

The 23-page opinion also notes that the record includes testimony indicating that consumer preferences for butter are much narrower than for other similar commodities, notably cheese – which the state also grades, but on a voluntary, not a mandatory, basis.

“Minerva’s best argument is that the statute imposes a disparate cost on out‐of‐state individuals who apply to become Wisconsin‐licensed butter graders,” because they must bear the costs of traveling to Wisconsin to sit for the exam, Judge Flaum said.

“But this geographical fact of life does not constitute discrimination against out‐of‐state applicants,” Flaum continued.

U.S. Circuit Judges Ilana Rovner and Daniel Manion joined the opinion.

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