Law School Case Brief
Hillside Dairy, Inc. v. Lyons - 539 U.S. 59, 123 S. Ct. 2142 (2003)
While § 144 of the Federal Agriculture Improvement and Reform Act of 1996, 7 U.S.C.S. § 7254, unambiguously expresses an intent to authorize state regulations with respect to California's compositional and labeling laws, that expression does not encompass the pricing and pooling laws.
The state of California maintained a milk-pricing and milk-pooling program that was distinct from the federal program that regulated milk marketing in the rest of the United States. Under California's program, California processors of fluid milk purchased raw milk from in-state producers at a premium price, which consisted of (1) a guaranteed minimum price to the raw-milk producer, and (2) a contribution to a price-equalization pool. During the early 1990's, market conditions made it profitable for some California processors to buy raw milk from out-of-state producers at prices that were higher than the prices guaranteed to California dairy farmers yet lower than the premium prices required for in-state purchases. In 1997, California amended the program so as to require some California processors to make contributions to the pool on their out-of-state raw-milk purchases as well as their in-state purchases. Some out-of-state dairy farmers brought suit against some California state agricultural officials contending that the 1997 amendment discriminated against them. The farmers alleged, among other matters, that the 1997 amendment violated (1) the Federal Constitution's commerce clause (Art I, § 8, cl 3), and (2) the privileges and immunities clause in the Constitution's Article IV, § 2. The District Court dismissed the causes of action under these clauses. On appeal, the Ninth Circuit affirmed the District Court. It concluded that § 144 of the Federal Agriculture Improvement and Reform Act of 1996, which permitted California to effect laws regarding the percentage of milk solids or "solids not fat" in fluid milk products sold in California, and the labeling of such fluid milk products, had immunized California's milk-pricing and milk-pooling laws from a commerce-clause challenge. The claim under the privileges and immunities clause failed because the provisions of the 1997 amendment did not, on their face, create classifications that were based on any individual's residency or citizenship.
Did the 1997 amendment, which required some California processors to make contributions to the pool on their out-of-state raw-milk purchases as well as their in-state purchases, discriminate against out-of-state dairy farmers?
The judgment was vacated and the cases were remanded for further proceedings. The Court held that the lower court erred in relying on § 7254 to dismiss the out-of-state producers' challenge. The lower court also erred in rejecting the Privileges and Immunities Clause claim on the ground that the California laws did not, on their face, create classifications based on any individual's residency or citizenship because the absence of an express statement identifying out-of-state citizenship as a basis for disparate treatment was not a sufficient basis for rejecting the claim. It held that California's milk-pricing and milk-pooling program was not exempted from commerce-clause scrutiny by § 144, for although § 144 unambiguously expressed an intent to insulate California's compositional and labeling laws from a commerce-clause challenge, § 144 did not clearly express an intent to insulate the pricing and pooling laws from such a challenge.
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