On May 2, 2016 Ranchers-Cattlemen Legal Defense Fund, United Stockgrowers of America v. Vilsack, No. 4:16-cv-00041 (D. Mont. May 2, 2016) (“R-CALF”) was filed in the United States District Court for the District of Montana. R-CALF is arguably the most serious constitutional challenge to the national beef checkoff in more than a decade. Since 2016, R-CALF has unfolded to include two appeals to the United States Court of Appeals for the Ninth Circuit, triggered historically significant changes to the administration of the Montana Beef Council and numerous other states’ Qualified State Beef Councils, and has even spawned new litigation filed by the same plaintiff against USDA. The outcome of that new lawsuit, Ranchers-Cattlemen Legal Defense Fund, United Stockgrowers of America v. USDA, No. 1:20-cv-02552 (D. D.C. Sept. 11, 2020), will further define the future administration of the beef checkoff. That litigation will be addressed in an upcoming article in this series. This article focuses on the evolution of R-CALF up to its present appeal before the Ninth Circuit.
For more background information, specifically on the unique federal-state partnership structure of the national beef checkoff that is central to R-CALF, please review two of the prior articles in this Legal Checkup on Checkoff series, What is a Checkoff?, and Beef Checkoff Basics.
Background: Johanns to Janus
The path to R-CALF traces to the seminal U.S. Supreme Court checkoff decision in Johanns v. Livestock Marketing Ass’n, 544 U.S. 550 (2005). Johanns was itself preceded by two other landmark Supreme Court checkoff decisions – Glickman v. Wileman Bros. & Elliott, Inc., 521 U.S. 457 (1997) and United States v. United Foods, Inc., 533 U.S. 405 (2001). In Johanns, the plaintiffs argued, as did the plaintiffs in Glickman and United Foods with respect to tree fruit and mushroom programs, respectively, that the mandated assessment on beef violated the First Amendment because it forced them to subsidize speech – specifically, generic advertisements for beef– with which they disagreed. The Court explained that “For the third time in eight years, we consider whether a federal program that finances generic advertising to promote an agricultural product violates the First Amendment. In these cases, unlike the previous two, the dispositive question is whether the generic advertising at issue is the Government’s own speech and therefore is exempt from First Amendment scrutiny.” (Id. at 553).
The path to R-CALF also includes the Supreme Court decision in Knox v. SEIU, Local 1000, 567 U.S. 298 (2012), which was followed during the course of R-CALF by yet another landmark Supreme Court decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018). Knox and Janus involved public employee union dues in which plaintiffs raised objections similar to those in Glickman, United Foods, and Johanns. Specifically, the plaintiffs in Knox and Janus objected to being forced by state law to contribute mandatory public union dues to subsidize speech espoused via the unions with which they disagree. These two decisions will be addressed in an upcoming article in this series.
In Johanns, the Court held that the speech at issue was government speech because the messages pronounced by the Cattlemen’s Promotion and Research Board (“Beef Board”) and the Cattlemen’s Beef Operating Committee “is effectively controlled by the Federal Government itself.” (Id. at 560). The Court added, “When, as here, the government sets the overall message to be communicated and approves every word that is disseminated, it is not precluded from relying on the government-speech doctrine merely because it solicits assistance from nongovernmental sources in developing specific messages.” (Id. at 562).
At the time Johanns was decided, several similar constitutional challenges to other checkoff programs had wound their way through the court system, with most courts holding that the checkoff program at issue violated the First Amendment. All of those legal actions perished in the wake of Johanns. Additionally, more than a half dozen new First Amendment challenges were brought against other state and federal checkoff programs in the decade following Johanns. Johanns was applied in each of those cases, and each upheld the constitutionality of the program at issue. Thus, Johanns proved to be a fortress seemingly capable of repelling all First Amendment attacks on checkoff programs.
So, what makes R-CALF so different, particularly since it raises the same legal argument against the same beef checkoff program that the United States Supreme Court previously upheld in Johanns and has proven effective at defeating so many other First Amendment challenges? The answer to this question lies within the federal-state partnership structure that is the heart of the national beef checkoff, which is reflected in the discussion below. For a more thorough discussion of that background, see Beef Checkoff Basics, here.
R-CALF: 2016 Through 2021
As noted, Johanns focused on the oversight and “effective control” the USDA Secretary exercised over the Beef Research and Promotion Board and the Beef Promotion Operating Committee. R-CALF, on the other hand, targeted Montana’s QSBC, the Montana Beef Council (MBC). The plaintiffs argued that the portion of the dollar-per-head beef checkoff assessment that is retained and expended by the MBC constituted a “government-compelled subsidy of the speech of a private entity” which is unconstitutional under the First Amendment pursuant to Johanns. By targeting a state beef council, the plaintiffs advanced an ironic twist to the longstanding beef checkoff saga: leverage the fortress of Johanns to open a new front on the state level component of the national beef checkoff and to do so in a manner that, if successful, would deny the MBC (and potentially other QSBCs) assessment funds it would have otherwise retained and expended as commonly done since 1985.
Very importantly, the plaintiff also asserted that “on information and belief, neither USDA nor the Montana Beef Council has established a procedure by which a cattle producer who disagrees with the Montana Beef Council’s message can request that the complete amount of his assessments be directed to the Beef Board, a body controlled by the federal government.” (R-CALF Compl. at ¶74). Approximately six weeks later, on July 15, 2016, USDA addressed this concern by issuing the proposed rule, Soybean Promotion, Research, and Consumer Information; Beef Promotion and Research; Amendments to Allow Redirection of State Assessments to the National Program; Technical Amendments. The final rule was issued on May 13, 2019.
On August 4, 2016, USDA filed its initial response to the lawsuit. The response focused almost exclusively on the application of the proposed Redirection Rule. USDA asserted that the plaintiffs’ First Amendment rights were not violated because “in accordance with USDA’s longstanding policy, cattle producers in states like Montana may decline to contribute to a QSBC and instead direct the QSBC to forward the full amount of their federal assessment to the Beef Board.” (See R-CALF, Memorandum in Support of Defendants’ Motion to Dismiss Or, In The Alternative to Stay the Case, Doc. 19-1, at 7-8.). According to USDA, the “longstanding policy” is predicated on the legal premise that “neither the Beef Act nor the Beef Order requires cattle producers to contribute a portion of the $1-per-head checkoff to a QSBC.” (Id. at 12 (citing 7 U.S.C. § 2904; 7 C.F.R. Pt. 1260; and the Redirection Proposed Rule, 81 Fed. Reg. 45,984, 45,986). USDA explained, “Therefore, in circumstances where there is no state law requiring cattle producers to contribute to the QSBC, USDA has always understood and interpreted the Beef Act and Beef Order to permit a cattle producer who does not wish to voluntarily contribute to a QSBC to submit a redirection request to the QSBC.” (Id. at 12-13).) USDA concluded that it was “not aware of any Montana state law or regulation that requires cattle producers to contribute to the Montana Beef Council.” (Id. at 14).
The proposed rule sought to formalize what USDA described as its “longstanding policy” of allowing cattle producers in Montana and other states to request that the entire one-dollar-per head assessment be “directed”, or “redirected”, to the Cattlemen’s Promotion and Research Board (“Beef Board”). This development had the ironic effect of bringing the litigating parties into complete agreement on a central issue in the litigation – whether a producer could forward his or her full assessment to the Board. Further, the proposed rule arguably offered a solution to very problem of which the plaintiff complained. Despite this, the courts in R-CALF have not viewed the Redirection Rule, standing alone, as being sufficient to satisfy the plaintiff’s First Amendment concerns.
On December 12, 2016, the United States Magistrate Judge assigned to R-CALF issued Findings Recommendations (F&R) almost entirely in plaintiff’s favor. (R-CALF, Findings and Recommendations of United States Magistrate Judge, Doc. 44 (Dec. 12, 2016). The F&R were fully adopted by the federal district court later several months later. The F&R, among other items, granted the plaintiff’s motion for preliminary injunction that would require producers to “opt in” to having any of the national checkoff assessment be retained by the MBC. Specifically, the F&R stated that “it is unlikely that the government exerts enough control over MBC’s speech to qualify the speech as government speech.” (Id. at 10).
Before the federal district court could issue the final decision, however, USDA announced it had entered into a Memorandum of Understanding with the Montana Beef Council that provided new levels of direct USDA oversight over the MBC. As noted, the federal district court materially adopted the magistrate’s F&R. In so doing, the court did not address the MOU. Additionally, both the Magistrate and the federal district court determined that the procedures set forth in the proposed Redirection Rule were insufficient to overcome the plaintiff’s First Amendment concerns. USDA appealed the matter to the Ninth Circuit. For more background regarding the MOU, see Recent MOU Provides Direct USDA AMS Oversight of State Beef Council and Binds All Third Parties That Contract With State Beef Council, available here.
In April of 2018, the Ninth Circuit affirmed in a 2-1 decision the issuance of the preliminary injunction (R-CALF, 718 Fed. Appx. 541 (2018)). The oral arguments for this appeal occurred on March 5, 2018 and are available here. The majority did not factor the MOU in its decision, stating that “the Secretary waived any argument that the district court’s silence regarding the MOU was an abuse of discretion, because he failed to articulate this argument in his opening brief.” (cite (citations omitted)). The dissenting opinion stated that “the district court’s decision to preliminarily enjoin the operation of a federal program as unconstitutional without at least addressing the Memorandum was an abuse of discretion.” With the issuance of the preliminary injunction affirmed, the matter returned to the federal district court.
The plaintiff sought a permanent injunction with respect to the MBC. Additionally, the plaintiff requested that the injunction be applicable to several other states as well — . It bears noting that the Montana Beef Council, Nebraska Beef Council, Pennsylvania Beef Council, Texas Beef Council, and other individual parties were allowed to intervene into the action.
On March 27, 2020, the previous legal victories enjoyed by the plaintiffs were essentially erased.
The federal district court, based on the Magistrate’s Finding and Recommendation, among other determinations granted summary judgment in favor of USDA and defendant-intervenors on the basis that the MOUs provided sufficient control over the state beef councils’ speech to constitute government speech and therefore not violate the First Amendment.
The matter was then appealed to the Ninth Circuit, with briefs filed by each party. Oral arguments currently being scheduled. Oral arguments are not yet scheduled, but will not occur before June 2021.