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Date: 10-04-2021
Case Style:
RANCHERS CATTLEMEN ACTION LEGAL FUND UNITED STOCKGROWERS OF AMERICA V. THOMAS VILSACK in his Official Capacity as Secretary of Agriculture; UNITED STATES DEPARTMENT OF AGRICULTURE
Case Number: 20-35453
Judge: Andrew D. Hurwitz
Court: UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Plaintiff's Attorney:
Defendant's Attorney: Lindsey Powell (argued) and Michael S. Raab, Appellate
Staff; Civil Division, United States Department of Justice,
Washington, D.C.; Ryan M. Majerus, Senior Counsel;
Stephen A. Vaden, General Counsel; United States
Department of Agriculture
Description:
San Francisco, CA - Agricultural lawyer represented
Plaintiff-Appellant with a summary judgment in favor of federal defendants and state intervenor defendants in an action brought by the Ranchers-Cattlemen Action claim.
The Beef Promotion and Research Act of 1985 (“Beef
Act”) imposes a $1 assessment, or “checkoff,” on each head
of cattle sold in the United States to fund consumption
promotions to “maintain and expand domestic and foreign
markets and uses for beef and beef products.” 7 U.S.C.
§§ 2901(b), 2904(8)(C). The Secretary of Agriculture
oversees the beef checkoff program through the Cattlemen’s
Beef Promotion and Research Board (the “Beef Board”),
whose members the Secretary appoints. Id. § 2904(1).1 A
QSBC typically collects the checkoff, retaining 50 cents to
1 The Beef Board elects ten members to the Beef Promotion
Operating Committee; a federation of QSBCs elects the other ten
members. 7 U.S.C. § 2904(4)(A). The Operating Committee develops
promotional campaigns for the Beef Board. See 7 U.S.C. § 2904(4)(B).
R-CALF V. VILSACK 7
fund state marketing efforts, and forwarding the remainder
to the federal program. Id. § 2904(8)(C); 7 C.F.R.
§ 1260.172(a)(3). Producers may, however, opt out of
funding their QSBC and direct the entire assessment to the
federal program. See Beef Promotion and Research, 84 Fed.
Reg. 20,765, 20,766–67 (May 13, 2019).
Since 2016, the Secretary, through the Agricultural
Marketing Service (“AMS”), has entered into memoranda of
understanding (“MOUs”) with QSBCs. The MOUs grant
the Secretary pre-approval authority over “any and all
promotion, advertising, research, and consumer information
plans and projects.” The Secretary also reviews and
approves the QSBCs’ budgets and marketing plans, which
detail their anticipated expenses and disbursements, and
government officials can participate in QSBC board
meetings at which promotional and funding decisions are
made. The MOUs allow the Secretary to decertify a
noncompliant QSBC, thereby terminating its access to
checkoff funds.
Using checkoff funds, QSBCs can hire private third
parties to produce advertisements and other promotional
materials. Some engagements involve contracts. Under the
MOUs, the Secretary must pre-approve all contracts and any
plans or projects developed under them. The parties agree
that third-party speech generated pursuant to these contracts
is government speech.
But QSBCs can also make noncontractual transfers of
checkoff funds to third parties to produce promotional
materials. Materials produced by this funding method need
not be pre-approved. Recipients of these transfers must
identify their expenditures in an “annual accounting” and
abide by the principles of the Beef Act—promoting beef
without being unfair, deceptive, or political. The primary
8 R-CALF V. VILSACK
issue on appeal is whether speech made by third parties
under these arrangements is effectively government speech.
B
R-CALF’s members include cattle producers who object
to their QSBCs’ advertising campaigns. R-CALF first
challenged the checkoff program in 2016, alleging that the
distribution of funds to the MBC under the federal program
is an unconstitutional compelled subsidy of private speech.
While that litigation was pending, the MBC entered into an
MOU with the Secretary. Without considering the MOU,
the district court entered a preliminary injunction preventing
the use of checkoff funds for promotional campaigns absent
the producers’ consent. A divided panel affirmed the
preliminary injunction; the majority expressly declined to
consider the effect of the MOU. R-CALF v. Perdue, 718 F.
App’x 541, 542 n.1 (9th Cir. 2018). The dissent opined that
the MOU “plainly grants the Secretary complete preapproval authority over ‘any and all promotion, advertising,
research, and consumer information plans and projects’ of
the MBC,” and therefore would have vacated the
preliminary injunction. Id. at 543 (Hurwitz, J., dissenting)
(quoting Johanns v. Livestock Mktg. Ass’n, 544 U.S. 550,
560 (2005)).
On remand, R-CALF amended its complaint to seek
relief against fourteen additional QSBCs, all of which had
MOUs with the Secretary. Four QSBCs and three producers
intervened to defend the program. The district court granted
summary judgment to the Secretary and intervenors,
adopting a magistrate judge’s proposed findings of fact and
conclusions of law.
The district court found that R-CALF had standing to
sue. But it concluded that the MOUs gave the Secretary
R-CALF V. VILSACK 9
sufficient control over the promotional program to make the
QSBCs’ speech—and the speech of third parties they paid—
effectively government speech. It also rejected R-CALF’s
request for an injunction to ensure the Secretary continues to
enforce the terms of the MOUs. R-CALF timely appealed.
II
We agree with the district court that R-CALF has
associational standing to sue the twelve QSBCs to which its
members pay checkoffs. But R-CALF concedes that it lacks
such standing to challenge the use of checkoff funds by
QSBCs in states where none of its members pay checkoffs—
Hawaii, South Carolina, and Vermont. Thus, R-CALF must
establish direct standing to sue those three QSBCs.
“[A]n organization has direct standing to sue where it
establishes that the defendant’s behavior has frustrated its
mission and caused it to divert resources in response to that
frustration of purpose.” E. Bay Sanctuary Covenant v.
Biden, 993 F.3d 640, 663 (9th Cir. 2021). “Of course,
organizations cannot manufacture the injury by incurring
litigation costs or simply choosing to spend money fixing a
problem that otherwise would not affect the organization at
all, but they can show they would have suffered some other
injury had they not diverted resources to counteracting the
problem.” Id. (cleaned up); see also Am. Diabetes Ass’n v.
U.S. Dep’t of the Army, 938 F.3d 1147, 1154–55 (9th Cir.
2019) (collecting cases).
R-CALF’s mission includes “protecting domestic,
independent cattle producers.” R-CALF uses some 60% of
its resources to educate producers on the use of checkoff
funds by QSBCs. The beef checkoff program affects that
mission and R-CALF has devoted (and continues to devote)
resources, independent of expenses for this litigation, to deal
10 R-CALF V. VILSACK
with the program that might otherwise be used in support of
that mission. See Comite de Jornaleros de Redondo Beach
v. City of Redondo Beach, 657 F.3d 936, 943 (9th Cir. 2011)
(en banc) (spending “time and resources” to “meet” with
impacted individuals that kept from other “core organizing
activities” established standing); see also Valle del Sol Inc.
v. Whiting, 732 F.3d 1006, 1018 (9th Cir. 2013) (“divert[ing]
resources to educational programs” established standing).
Moreover, if R-CALF did not pursue this litigation, the
QSBCs would have continued to use funds in a way that
would frustrate R-CALF’s organizational mission by
allegedly “promot[ing] corporate consolidation in the beef
industry.” See E. Bay Sanctuary, 993 F.3d at 663. We
therefore find that R-CALF has direct standing to pursue this
litigation against the three QSBCs to which none of its
members pay checkoffs.
III
A
The critical question in determining whether speech is
public or private is whether the speech is “effectively
controlled” by the government. Johanns, 544 U.S. at 560.
In Johanns, the Supreme Court upheld the federal portion of
the beef checkoff program against a compelled-speech
attack because “the government sets the overall message to
be communicated and approves every word that is
disseminated.” Id. at 562. Johanns “emphasized three
overlapping aspects” of the federal program: (1) “Congress
directed the establishment of the program itself, including its
promotional activities,” (2) “Congress and the Secretary
specify the general content of the promotional campaigns,”
and (3) “the Secretary ‘exercises final approval authority
over every word used in every promotional campaign.’”
Paramount Land Co. LP v. Cal. Pistachio Comm’n, 491 F.3d
R-CALF V. VILSACK 11
1003, 1009–10 (9th Cir. 2007) (quoting Johanns, 544 U.S.
at 560–61, 563); see also Delano Farms Co. v. Cal. Table
Grape Comm’n, 586 F.3d 1219, 1226–27 (9th Cir. 2009)
(identifying the same factors).
Applying the Johanns factors, this Court has twice
issued opinions upholding mandatory assessment programs
against First Amendment attacks.2 Paramount Land refused
to enjoin as unconstitutional a California statute providing
subsidies from assessments on pistachio sales to the
California Pistachio Commission because the State had
specified the overall goal of the program—to promote
pistachio sales—and exercised control over messaging.
491 F.3d at 1010–12. The Commission, comprised of nine
members, only one of whom was named by the State, was
required to submit to the State for concurrence “an annual
statement of contemplated activities . . . including
advertising, promotion, marketing research, and production
research.” Id. at 1010 (quoting Cal. Food & Agric. Code
§ 69051(q)). Noting that the State had “less control” over
the Commission than the Secretary exercised over the Beef
Board, the Paramount panel nonetheless concluded that
“[t]o draw a line between these two approaches to oversight
risks micro-managing legislative and regulatory schemes, a
task federal courts are ill-equipped to undertake.” Id.
at 1011–12.
Delano Farms upheld similar compulsory assessments
on California table grape growers, citing a state legislative
directive that went “much further in defining the
Commission’s message than the Beef Act” along with the
2 In an unpublished decision, this Court also upheld mandatory
assessments on rental car transactions. See In re Tourism Assessment
Fee Litig., 391 F. App’x 643, 645–46 (9th Cir. 2010).
12 R-CALF V. VILSACK
State’s power to appoint and remove all California Table
Grape Commissioners. 586 F.3d at 1225, 1228, 1230. The
Court reached this conclusion despite recognizing that the
statute did “not require any type of review by the [State] over
the actual messages promulgated by the Commission.” Id.
at 1229.
B
This case is similar to Paramount Land and Delano
Farms. Under the MOUs, QSBCs must submit “for preapproval” by the Secretary “any and all promotion,
advertising, research, and consumer information plans and
projects”3 and “any and all potential contracts or agreements
to be entered into by [QSBCs] for the implementation and
conduct of plans or projects funded by checkoff funds.”4
QSBCs must also submit “an annual budget outlining and
explaining . . . anticipated expenses and disbursements” and
a “general description of the proposed promotion, research,
consumer information, and industry information programs
contemplated.” See Paramount Land, 491 F.3d at 1010
(noting that the Pistachio Commission must submit “an
annual statement of contemplated activities . . . including
advertising, promotion, marketing research, and production
research” (quoting Cal. Food & Agric. Code § 69051(q))).
Failure to comply can lead to de-certification of the QSBCs
by the Secretary. This establishes, as in the federal program,
“final approval authority over every word used in every
promotional campaign.” Johanns, 544 U.S. at 561.
3 QSBCs have submitted thousands of approval requests to the
AMS. For example, the Texas QSBC has made more than 650
submissions, and it may take days or weeks before a final product is
approved.
4 In 2018 and 2019, the AMS reviewed about 155 QSBC contracts.
R-CALF V. VILSACK 13
Promotional campaigns by QSBCs and contracted third
parties subject to the Secretary’s pre-approval are therefore
plainly government speech.
Third-party speech not subject to pre-approval is also
“effectively controlled” by the government. Congress
expressly contemplated the participation of third parties in
the beef checkoff program, designating several “established
national nonprofit industry-governed organizations” with
whom the Operating Committee could contract to
“implement programs of promotion.” 7 U.S.C. § 2904(6).5
The Supreme Court upheld that program despite recognizing
the presence of “assistance from nongovernmental sources
in developing” advertising. Johanns, 544 U.S. at 562.
Paramount Land vacated a preliminary injunction in a
similar program despite the Pistachio Commission’s use of
funds from assessments to pay “a political consultant who
hires lawyers to represent the industry before the
International Trade Commission and the Commerce
Department, and to lobby government entities on behalf of
the pistachio industry.” 491 F.3d at 1007. We treated the
third-party speech as that of the Commission because the
“message set out in the pistachio promotions is from
5 Most of the third-party funding goes to two advocacy
organizations—the Federation Division of the National Cattleman’s
Beef Association (“Federation”) and the United States Meat Export
Federation (“USMEF”)—with established relationships with the Beef
Board. Congress gave the Federation an express role in the beef checkoff
program, authorizing it to elect members of the Operating Committee,
7 U.S.C. § 2904(4)(A), and directing the Operating Committee to “enter
into contracts or agreements . . . with established national nonprofit
industry-governed organizations, including the federation . . . to
implement programs of promotion, research, consumer information, and
industry information,” 7 U.S.C. § 2904(6).
14 R-CALF V. VILSACK
beginning to end the message established by the state
government.” Id. at 1012 (cleaned up).
Here, too, the message is firmly established by the
federal government. The Beef Act’s implementing
regulations require that all third-party speech “strengthen the
beef industry’s position in the marketplace,” and not
mention “brand or trade” names, engage in “unfair or
deceptive acts or practices,” or seek to influence
“governmental policy or action.” 7 C.F.R. § 1260.169(a),
(d), (e). QSBCs must submit annual budget and marketing
proposals for the Secretary’s approval that contain
“anticipated expenses and disbursements” and “a general
description of the proposed promotion . . . programs
contemplated.” In addition, the QSBCs must give the
Secretary advance notice of all board meetings, allowing
participation by the Secretary or his designees in any
discussions about payments to third parties.6
R-CALF argues that such safeguards are insufficient
because the government does not exercise final pre-approval
authority over some third-party speech. But in Paramount
Land, we found dispositive the government’s ability to
control speech, even when it declined to do so. See 491 F.3d
at 1011–12. Here, the Secretary clearly has that authority.
In addition to the oversight previously mentioned, the
Secretary has unquestioned control of the flow of assessment
funds to the QSBCs—and the threat of decertification under
the MOUs and the regulations if he disapproves of the use of
those funds. See 7 C.F.R. § 1260.181(a) (providing for
certification, and, impliedly, decertification of QSBCs by
6 Defendants also argue that the opt-out scheme cures any First
Amendment concern. Because we hold that the government effectively
controls the speech at issue, we do not reach this issue.
R-CALF V. VILSACK 15
the Beef Board); see also id. § 1260.213 (providing for the
removal of Beef Board members by the Secretary). “Just as
‘the Secretary of Agriculture does not write the copy of the
beef advertisements himself’ for the Beef Board, neither
should such oversight be required for the [] scheme to pass
constitutional muster.” Paramount Land, 491 F.3d at 1012
(quoting Johanns, 544 U.S. at 560) (cleaned up). A contrary
holding here “risks micro-managing legislative and
regulatory schemes, a task federal courts are ill-equipped to
undertake.” Id. at 1012.7
We therefore affirm the summary judgment of the
district court.
IV
Even if the underlying summary judgment is affirmed,
R-CALF nonetheless argues that the district court should
have entered a permanent injunction requiring the
continuation of the MOUs to prevent the risk that the current
policy will be undone. The district court determined that no
7 R-CALF also argues that the QSBCs must have at least some
members appointed and removable by the Secretary for the speech to
constitute government speech. But the Secretary’s ability to decertify a
QSBC—which has been previously exercised—provides even greater
oversight than the limited removal authority this Court has cited in other
cases. See Delano Farms, 586 F.3d at 1229 (noting the State’s power to
remove individual members of the Table Grape Commission and to
recommend that producers suspend the Commission’s operation);
Paramount Land, 491 F.3d at 1011 (noting that while the Secretary
cannot remove members of the Pistachio Commission, she may “suspend
or discharge the Commission’s president if he has engaged in any
conduct that the Secretary determines is not in the public interest,” or
“correct or cease any existing activity or function that is determined by
the [S]ecretary not to be in the public interest or in violation of the
Pistachio Act”) (cleaned up).
16 R-CALF V. VILSACK
injunction was needed because the MOUs mooted RCALF’s entitlement to relief and no exception to mootness
applied.
“It is well-established . . . that ‘voluntary cessation of
allegedly illegal conduct does not deprive the tribunal of
power to hear and determine the case’ unless ‘it can be said
with assurance that there is no reasonable expectation that
the alleged violation will recur’ and ‘interim relief or events
have completely and irrevocably eradicated the effects of the
alleged violation.’” Fikre v. FBI, 904 F.3d 1033, 1037 (9th
Cir. 2018) (cleaned up) (quoting Cnty. of Los Angeles v.
Davis, 440 U.S. 625, 631 (1979)). The government receives
greater deference than private parties when courts analyze
voluntary cessation. See Am. Cargo Transp., Inc. v. United
States, 625 F.3d 1176, 1180 (9th Cir. 2010) (collecting
cases). But the government “must still demonstrate that the
change in its behavior is entrenched or permanent.” Fikre,
904 F.3d at 1037 (cleaned up). It must be “absolutely clear
to the court, considering the procedural safeguards insulating
the new state of affairs from arbitrary reversal and the
government’s rationale for its changed practices, that the
activity complained of will not reoccur.” Id. at 1039
(cleaned up).
Outcome: Even if the underlying summary judgment is affirmed,
R-CALF nonetheless argues that the district court should
have entered a permanent injunction requiring the
continuation of the MOUs to prevent the risk that the current
policy will be undone. The district court determined that no
injunction was needed because the MOUs mooted RCALF’s entitlement to relief and no exception to mootness
applied.
“It is well-established . . . that ‘voluntary cessation of
allegedly illegal conduct does not deprive the tribunal of
power to hear and determine the case’ unless ‘it can be said
with assurance that there is no reasonable expectation that
the alleged violation will recur’ and ‘interim relief or events
have completely and irrevocably eradicated the effects of the
alleged violation.’” Fikre v. FBI, 904 F.3d 1033, 1037 (9th
Cir. 2018) (cleaned up) (quoting Cnty. of Los Angeles v.
Davis, 440 U.S. 625, 631 (1979)). The government receives
greater deference than private parties when courts analyze
voluntary cessation. See Am. Cargo Transp., Inc. v. United
States, 625 F.3d 1176, 1180 (9th Cir. 2010) (collecting
cases). But the government “must still demonstrate that the
change in its behavior is entrenched or permanent.” Fikre,
904 F.3d at 1037 (cleaned up). It must be “absolutely clear
to the court, considering the procedural safeguards insulating
the new state of affairs from arbitrary reversal and the
government’s rationale for its changed practices, that the
activity complained of will not reoccur.” Id. at 1039
(cleaned up).
The government has met that burden here. To be sure,
the MOUs are revocable. And, the Secretary entered into the
first MOU only after the magistrate judge recommended a
preliminarily injunction in this case. But, over five years
have now passed since the Secretary first entered into the
MOUs to document the Department’s control of the use of
checkoff funds—including with QSBCs not named in this
litigation. See Am. Diabetes Ass’n, 938 F.3d at 1153 (finding
two years of policy weighs in favor of mootness). And the
MOUs remain binding unless both parties agree to rescind
R-CALF V. VILSACK 17
them, providing safeguard from arbitrary reversal. See
Fikre, 904 F.3d at 1039. Under these circumstances, the
MOUs are an “entrenched” change in the prior status quo,
and the district court did not err, in the absence of any
evidence that the Secretary intends to withdraw from the
MOUs, in declining to enter a permanent injunction
requiring him not to.
AFFIRMED
Plaintiff's Experts:
Defendant's Experts:
Comments: