Black v. Bland Farms, LLC , 332 Ga. App. 653 ( 2015 )

FIRST DIVISION
PHIPPS, C. J.,
DOYLE, P. J., and BOGGS, J.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules/
June 30, 2015
In the Court of Appeals of Georgia
A15A0042, A15A1610. GARY BLACK, IN HIS OFFICIAL B O - 0 0 2 ,
CAPACITY AS GEORGIA COMMISSIONER OF 080
AGRICULTURE v. BLAND FARMS, LLC.
BOGGS, Judge.
In Case No. A15A0042, Gary Black, in his official capacity as the Georgia
Commissioner of Agriculture (“the Commissioner”), appeals from a trial court ruling
declaring a new Vidalia onion packing regulation invalid. The Commissioner
contends that the plaintiff, Bland Farms, LLC, did not demonstrate that it had
standing to bring the action, and that the new regulation was a valid one. For the
following reasons, we agree with the trial court that Bland Farms has standing to
bring a declaratory judgment action, but hold that the packing regulation was a valid
exercise of the Commissioner’s authority pursuant to the Vidalia Onion Act, OCGA
§ 2-14-130 et. seq. We therefore affirm in part and reverse in part in Case No.
A15A0042. Case No. A15A1610 is dismissed as moot.1
In 1986, the Georgia General Assembly enacted the Vidalia Onion Act. OCGA
§ 2-14-130. Use of the term “Vidalia” is prescribed by OCGA § 2-14-132:
Only onions which are of the Vidalia onion variety and which are grown
within the Vidalia onion production area may be identified, classified,
packaged, labeled, or otherwise designated for sale inside or outside this
state as Vidalia onions. The term “Vidalia” may be used in connection
with the labeling, packaging, classifying, or identifying of onions for
sale inside or outside this state only if the onions are of the Vidalia
onion variety and are grown in the Vidalia onion production area.
“In 1990, the State of Georgia, through the Department of Agriculture, applied for the
U. S. certification mark ‘Vidalia®,’ and the mark was registered with the U. S. Patent
and Trademark Office on August 19, 1992.” In 2000, the legislature amended the
Vidalia Onion Act to provide that “[t]he Commissioner of Agriculture is authorized
to take all actions necessary and appropriate” to promote and protect that trademark
1
In Case. No. A15A1610, the Commissioner appeals from a ruling of the trial
court clarifying that the final order in A15A0042 “clearly granted the injunction, and
thus [the Commissioner is] prohibited from enforcing” the new packing regulation.
Because we conclude in Case No. A15A0042 that the trial court erred in ruling that
the packing rule was invalid, Case No. A15A1610 is rendered moot.
2
“for use on or in connection with the sale or promotion of Vidalia onions and
products containing Vidalia onions.” OCGA § 2-14-132.1.
Within the past few years, however, the Georgia Department of Agriculture
(“the Department”) “received a large number of complaints from consumers unhappy
with the quality of Vidalia® onions on the store’s shelves . . . Decreased consumer
confidence could ultimately lead to reduced demand for Vidalia® onions and the
potential for long-term adverse economic impacts on Geogia’s Vidalia® onion
industry.” The Commissioner averred that
The Vidalia® onion industry has faced a serious quality control problem
caused in large part because Vidalia® onions are being harvested
prematurely. Vidalia® onions are typically planted in the fall season and
are rarely ready to be harvested before mid-April. The Vidalia® onion
needs time in the soil to fully mature and develop the sweet flavor and
other characteristics for which it is known. Some Vidalia® growers, in
an attempt to beat their competitors to fill store shelves with sweet
onions, have shipped onions under the Vidalia® trademark that were
harvested too soon and of poor quality, with diminished shelf life. This
practice has diminished consumer confidence in Vidalia® onions.
In order to address these concerns, on June 27, 2013, the Department sent a
“Notice of Intent to Consider Amendments to certain rules pertaining to the Georgia
Vidalia Onion Act” to all interested persons and parties. The notice invited written
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comments that would be considered at a public hearing to be held on July 30, 2013.
The Commissioner proposed to promulgate a regulation that would establish a
“packing date” before which no onion could be packed as a Vidalia onion: “Packing
precedes shipping, and by setting an appropriate April deadline before which no
Vidalia® onion could be packed, much less shipped, the packing date would have the
salutary effect of requiring growers to keep the onions in the soil for a longer period
of time and provide more time for curing the onions.”
Prior to the July 2013 hearing, the Commissioner received letters in support of
the proposed regulation. One grower explained:
Growers and shippers want to be first to market to extend their season
and capitalize on this draw factor. As shippers, we are all pressured to
ship early onions based on factors unrelated to the crop itself. Often
times, a retailer’s advertising calendar is set weeks in advance without
any confirmation the crop will be mature and ready to ship. It is difficult
to say “no” to a retailer and hope the business will return the following
week. The establishment of a pack date using the proposed guidelines
will not only reduce the quantity of immature onions on the market, but
more importantly it will increase the probability the crop as a whole has
matured to a marketable condition . . . .
In early March of 2013, the crop appeared to be maturing early due to
a warm December and January. Speculation began that Vidalia onions
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would be ready to ship by early April. Then the weather turned cool and
damp by mid-March. The crop stalled and did very little maturing over
the last two weeks of March. As April arrived, the tops of the onions
refused to fall, indicating that they were not ready for harvest. As the
impending promised ship dates approached, we were faced without a
good option except to proceed with prior shipping commitments. As a
result, most Vidalia onions that were shipped in early to mid April were
immature, soft, and discolored . . . Word in the market was, “What is
wrong with the Vidalia’s this year?” and “They look horrible.” The poor
quality and appearance of the onions caused retail sales to stall and
eventually caused markets to fall . . . .
Texas has proven that they can produce a mild, good quality, granex
type onion. When we in the Vidalia go to market early, our product does
not have the curb appeal of the well-cured, quality granex onion from
Texas. This encourages retail customers to stay with Texas until Vidalia
is more mature . . . .
Labor is often scheduled to arrive in early April because the industry
wants to be ready when the crop is ready. Often though, the labor is paid
to stay out of the fields while we wait for the crop to mature. If the
grower waits on the crop, the labor bill rises. If the grower takes the crop
prematurely to reduce his labor exposure, the quality of the product
shipped is compromised. I believe that as an industry, we could save
money on labor by knowing when the season starts.
5
A second grower explained in a letter to the Commissioner that “[t]he poor
quality of these early onions was one significant contributing factor to the poor
demand for Vidalia onions this year.” Another grower noted in his letter that a pack
date may not be “the answer, but it is likely the best answer to our industry concerns.”
(Emphasis in original.) He explained:
We’ve taken a May/June fresh market and forced it into an April/May
market - akin to forcing a square peg into a round hole. By bowing to
the demand of buyers who “won’t get beat” regarding first to market,
we’ve done ourselves and the consumer a disservice by placing an
inferior product on the market in those first weeks of shipping . . . we
saw untold receivers leave Vidalia® before we got started good, to
return to Texas.
Representatives from several onion farms attended the July 2013 meeting,
including representatives from Bland Farms. Counsel for Bland Farms expressed
strong opposition to the proposed rule change on grounds that such a change “can
only be done by the legislature” and would alter the current shipping date set forth in
OCGA § 2-14-136. Several other onion growers testified that they were in favor of
the proposed regulation because they felt it was needed to protect the Vidalia brand.
One grower explained that immature onions are “jeopardizing our industry.” Another
testified that
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our industry has suffered the last few years . . . as a result of onions
being put on the market early that were immature, that were dug
premature . . . And I think we have much better varieties. Our industry
was founded on the traditional Vidalia varieties, not the early varieties -
- the shape, the taste, the shelf life . . . Inspection service is great, and I
think there’s something to be said for our inspection service. But going
about it of fixing our problem with only a more strict inspection service
I don’t think is going to work. Number one, the manpower. To inspect
every load that gets shipped out of the industry, we don’t have the
manpower for that . . . Keep in mind that a lot of our onions that were
shipped this year, that were shipped prior to the 15th, which is our set
opening date, were inspected; they passed an inspection. And you can
make these onions pass inspection, but once they get on the shelf, they
don’t have any shelf life.
A third grower testified:
I’ve been growing onions 50-plus years, and there’s been more damage
done to the Vidalia name recognition of the onion in the last few years
by planting all these early-variety onions that are not what fall in the
category of what I consider a true Vidalia onion. We built this name of
the Vidalia onion on a good, true onion that is sweet, has good shelf life,
and what’s been hitting the market early in the past few years has not
been the true Vidalia onions . . . Breeders are breeding onions that come
off 30 days early. They might come off 30 days earlier but they’re not
the true Vidialia nature of the onion. They’re not sweet, they’re not mild,
you have aftertaste, and they do not last . . . We’re rushing the onions;
we’re growing them too fast, trying to get to market premature and
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shipping them premature. We don’t allow them to dry; we don’t allow
them to cure in the fields. It’s just amazing how much has changed from
where we first started . . .If something’s not done, then we can just as
well mark off the word Vidalia onions. If somebody wants to grow
onions and sell onions and want to put that junk on the market, put it
under their name, not under the Vidalia name; because I’m proud of the
Vidalia name and I’d like - - for my children and future generations, I’d
like to protect it.
A fourth grower was reluctant to agree that a packing date would solve the
problem: “Shelf life is one of the biggest problems we have . . . [T]he problem that
we have is we’ve got an inferior product, whether we mandate a date that we can ship
it or whether we mandate a date when we can pack it, it really doesn’t matter. If it’s
a crappy product, that’s what it’s going to be whenever it gets there.” But he stated
further that “if putting [a] packing date makes it that much better, I’m all for it.”
Following the hearing, on August 7, 2013, the Commissioner sent a letter to
“Vidalia Onion License Holders” with the new regulation attached, effective August
28, 2013, giving the Commissioner authorization “to determine and announce a
packing date each year for the Vidalia Onion®,” i. e., the “packing date rule.” See Ga.
Comp. R. & Regs. r. § 40-7-8-.17. The letter noted that the Department had
“conducted several listening sessions in recent months to discuss potential solutions
8
to the quality issues faced by the Vidalia Onion industry.” The Commissioner
explained that while some growers voiced opposition to the packing date rule and
asked the Department to urge the “Georgia Federal-State Inspection Service” to
provide more rigorous inspection during the season, his department had “no authority
to strengthen the regulations above U.S. #1.” He explained further that he “evaluated
the costs and required training associated with adding a projected 60 inspectors,” but
saw “no wisdom in passing this cost on to producers.”
On September 23, 2013, Bland Farms filed a “Complaint for Declaratory
Judgment and Injunctive Relief” asserting that the Commissioner promulgated a new
regulation that conflicted with the Georgia Vidalia Onion Act. Specifically, Bland
Farms asserted that the new regulation replaced “shipping date” with “packing date,”
thereby establishing a fixed date on which Vidalia onions may first be packed and
shipped, in direct contravention of the Act.
The Commissioner filed an answer, as well as a motion to dismiss the
complaint and a motion for summary judgment. Bland Farms moved for judgment on
the pleadings. Following a hearing, the trial court denied the Commissioner’s motion
to dismiss, finding that Bland Farms had standing to seek a declaratory judgment. The
court denied the Commissioner’s motion for summary judgment and granted Bland
9
Farms’ motion for judgment on the pleadings, finding that the Commissioner
exceeded the scope of his authority in adopting a regulation that abolishes the term
“ship date” in OCGA § 2-14-136. It is from this order that the Commissioner appeals.
On appeal from the grant of judgment on the pleadings, “we conduct a de novo
review of the trial court’s order to determine whether the undisputed facts appearing
from the pleadings entitle the movant to judgment as a matter of law.” (Citation,
punctuation and footnote omitted.) Hall v. Sencore, Inc., 302 Ga. App. 367 (691 SE2d
266) (2010). This court also conducts a de novo review from the trial court’s denial
of a motion for summary judgment. Johnson v. Omondi, 294 Ga. 74, 76 (751 SE2d
288) (2013). “A party is entitled to summary judgment if there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. OCGA
§ 9-11-56 (c).” (Citation omitted.) Id. at 75.
1. We first address the Commissioner’s assertion that Bland Farms lacks
standing to bring an action for declaratory judgment, and that therefore, sovereign
immunity has not been waived.
The State’s sovereign immunity has been specifically waived by the
General Assembly pursuant to OCGA § 50-13-10, which is part of the
Administrative Procedure Act. Therein, the State has specifically
consented to be sued and has explicitly waived its sovereign immunity
10
as to declaratory judgment actions in which the rules of its agencies are
challenged.
(Citations, punctuation and footnotes omitted.) DeKalb County School District v.
Gold, 318 Ga. App. 633, 637 (1) (a) (734 SE2d 466) (2012). “Actions for declaratory
judgment provided for in this Code section shall be in accordance with Chapter 4 of
Title 9, relating to declaratory judgments.” OCGA § 50-13-10 (c). Subsection (a) of
OCGA § 9-4-2 provides:
In cases of actual controversy, the respective superior courts of this state
shall have power, upon petition or other appropriate pleading, to declare
rights and other legal relations of any interested party petitioning for
such declaration, whether or not further relief is or could be prayed; and
the declaration shall have the force and effect of a final judgment or
decree and be reviewable as such.
And “[w]e must construe the declaratory judgment statute liberally. The statute is
available in situations presenting an ‘actual controversy’ where interested parties are
asserting adverse claims upon a state of facts wherein a legal judgment is sought that
would control or direct future action.” (Citations and punctuation omitted.) In re Doe,
262 Ga. 389, 390 (1) (418 SE2d 3) (1992). Moreover, “[i]n order to challenge a
statute or an administrative action taken pursuant to a statute, the plaintiff must
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normally show that it has interests or rights which are or will be affected by the
statute or the action.” (Citations and punctuation omitted; emphasis in original.)
Atlanta Taxicab Co. &c. v. City of Atlanta, 281 Ga. 342, 345 (2) (638 SE2d 307)
(2006).
The Commissioner argues that Bland Farms does not have standing because it
is “not walking in the dark and risking ‘undirected action’ stemming from a state of
uncertainty . . . [Bland Farms] understands the regulation, knows what it requires, and
would simply like the option of non-compliance.” The Commissioner cites Dept. of
Transp. v. Peach Hill Properties, 280 Ga. 624 (631 SE2d 660) (2006), as controlling
authority. But in that case, the plaintiff “elected to seek declaratory judgment rather
than initiate a new application” for a landfill exemption. Id. at 626 (1). The Georgia
Supreme Court held that the plaintiff must first file an exemption application, and be
denied, in order to proceed with a declaratory judgment action, because the court
cannot rule in the abstract. Id.In this case, however, Bland Farms is not challenging the adoption of a rule
that it is not affected by until it seeks an exemption under the rule, but is rather
challenging the adoption of a rule it is automatically affected by. The position of the
plaintiff in Peach Hill Properties, in contrast, is one step removed from the position
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of Bland Farms. As a Vidalia onion grower, Bland Farms is an interested party
claiming a right to ship onions pursuant to a statute - - a right it claims is impeded by
a newly enacted regulation. If Bland Farms fails to comply with the new regulation,
the Commissioner has statutory authority to impose civil and criminal penalties. See
OCGA §§ 2-14-134 (d), 2-14-135 (a). Thus, Bland Farms has made a sufficient
showing “that the facts are complete and that the interest is not merely academic,
hypothetical, or colorable, but actual.” Bd. of Nat. Resources &c. v. Monroe County,
252 Ga. App. 555, 557 (1) (556 SE2d 834) (2001). The trial court therefore did not
err in concluding that Bland Farms had standing to bring the declaratory judgment
action. See, e. g., Atlanta Taxi Cab Co., supra, 281 Ga. at 345 (2) (party entitled to
contest residency requirement to remove that as an impediment to the marketability
of its certificates of operation to non-residents); compare Monroe County, supra at
557-558 (1) (no standing where party had a generalized economic interest contingent
upon future events).
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2. The Commissioner asserts that the new regulation was valid.2 The crux of
the dispute here is the application of the new regulation in conjunction with OCGA
§ 2-14-136. That Code Section provides:
The Commissioner may determine and announce a shipping date each
year for the Vidalia onion marketing season in this state upon the
recommendation of the Vidalia Onion Advisory Panel. Vidalia onions
may be shipped prior to such date with a mandatory U.S. No. 1 grade
certificate. The Vidalia Onion Advisory Panel shall survey the
conditions of the Vidalia onion crop and recommend a shipping date for
the marketing season to the Commissioner.
(Emphasis supplied.) OCGA § 2-14-136. The regulation, Ga. Comp. R. & Regs. r. §
“40-7-8-.17 Packing Date,” provides:
The Commissioner is authorized to determine and announce a packing
date each year for the Vidalia Onion marketing season which shall
commence no sooner than 12:01 AM on the Monday of the last full
week of April, each year. Vidalia Onions shall not be packed or put into
commerce, at any time prior to the announced packing date. Once the
packing date is established, Vidalia Onions may be packed in containers
and shipped from that day forward. The Commissioner may, depending
on crop conditions and with the recommendation of the Vidalia Onion
Advisory Panel, specify a packing date other than the Monday of the last
2
We note that 11 onion growers filed an amicus curiae brief in this court in
support of the Commissioner.
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full week in April. Drying and other forms of onion preparation may
take place prior to the packing date.
Authority: OCGA § 2-14-133.3
(Emphasis supplied.)
The Commissioner contends that he is authorized to prescribe rules and
regulations governing packing pursuant to OCGA § 2-14-133, and that the pack date
rule is reasonable. Subsection (a) of OCGA § 2-14-133 provides in part:
The Commissioner is authorized to prescribe rules or regulations which
may include, but not necessarily be limited to, quality standards, grades,
packing, handling, labeling, and marketing practices for the marketing
of onions in this state, including the requirements that all Vidalia onions
be initially packed only in the Vidalia onion production area and that no
Vidalia onion may be shipped from the Vidalia onion production area
in bulk except as may be authorized by rule, and such other regulations
as are necessary to administer properly this article. The Commissioner
may also prescribe rules or regulations establishing a registration,
inspection, and verification program for the production and marketing
of Vidalia onions in this state and, after hearing and public comment,
3
In addition to the new packing date rule, the Commissioner also amended Ga.
Comp. R. & Regs. r. 40-7-8-.02 to remove the definition of “shipping date” and add
the definition of “packing date.” “‘Packing date’ means the first day on which Vidalia
Onions may be packed and shipped into commerce.” Ga. Comp. R. & Regs. r. 40-7-8-
.02 (r).
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further limiting the Vidalia onion production area as defined in
paragraph (5) of Code Section 2-14-131.
(Emphasis supplied.) The Commissioner contends that the packing date rule does not
abolish or contravene OCGA § 2-14-136. He argues that:
If the Commissioner chooses not to announce a shipping date in a
particular season, the proviso on shipping before the shipping date does
not apply, and growers may ship their Vidalia onions when they choose,
but must nevertheless comply with all other regulatory requirements,
which would include the packing date rule. If, however, the
Commissioner were to exercise his discretion to announce a shipping
date, then, in that event, growers, could not ship before such date;
however, under OCGA § 2-14-136, they would be allowed to ship
onions graded U.S. No. 1 prior to that shipping date.
He asserts that “a potential window of time could exist between the packing date and
the shipping date when growers” would be allowed to ship with a U.S. No. 1 grade.
Bland Farms contends that the packing date rule is essentially a new shipping date
rule, and that the Commissioner has no authority to promulgate a rule that establishes
a new method of determining ship dates in contravention of OCGA § 2-14-136. It
argues that what the statute permits has now been prohibited by rule.
16
“The test of the validity of an administrative rule is twofold: whether it is
authorized by statute and whether it is reasonable. In applying this test, we have
explained that the interpretation of a statute by an administrative agency which has
the duty of enforcing or administering it is to be given great weight and deference.”
(Citation and punctuation omitted.) Georgia Dept. of Community Health v. Dillard
313 Ga. App. 782, 785 (1) (723 SE2d 23) (2012). So the first question to be resolved
is whether the new regulation is authorized by statute. OCGA § 2-14-133 (a) provides
in part that “[t]he Commissioner is authorized to prescribe rules or regulations which
may include, but not necessarily be limited to, quality standards, grades, packing . .
. .” This provision grants the Commissioner broad authority to regulate packing.
But even where a rule is authorized, it must not “exceed[ ] the scope of or [be]
inconsistent with the authority of the statute upon which it is predicated.” Dillard,
supra. Bland Farms argues, and the trial court concluded, that the pack date rule
“establish[es] a new method for determining ship dates for Vidalia onions in
contravention of OCGA § 2-14-136,” and therefore exceeds the scope of the authority
granted by OCGA § 2-14-133. Bland Farms argues further that the new pack date rule
“prevent[s] Vidalia onion growers from exercising either of the two statutory rights
granted in OCGA § 2-14-136 – namely, to ship Vidalia onions (1) at growers’
17
discretion in absence of a shipping date, or (2) not before the shipping date without
a U.S. No. 1 certification.” But this argument is misguided.
OCGA § 2-14-136 does not grant growers a statutory right to ship, rather it
gives the Commissioner authority and/or discretion to announce a shipping date each
year. If the Commissioner does not announce a shipping date, the statute is silent as
to when growers can ship, and as Bland Farms argues, the result is that growers can
then ship at their discretion. If the Commissioner does announce a shipping date,
however, the statute provides that growers can ship prior to the date announced with
a U.S. No. 1 grade certificate. The statute is not written in terms of a right to ship
generally, but only permission to ship in a certain circumstance, all dependent upon
the exercise of the Commissioner’s discretion. Indeed, the provisions of the Vidalia
Onion Act are written to protect the Vidalia onion brand, OCGA § 2-14-132.1,
regulate the Vidalia onion industry, OCGA § 2-14-133, and impose penalties for
unlawfully using the Vidalia onion brand or for failing to comply with regulations
issued by the Commissioner, OCGA §§ 2-14-134, 2-14-135. The Act does not afford
growers statutory rights with regard to shipping or packing. Rather, the Act gives the
Commissioner both the authority to determine and announce a shipping date and the
authority to promulgate a rule or regulation for packing. While OCGA § 2-14-136
18
provides that onions may be shipped prior to the announced shipping date with a U.S.
No.1 grade certificate, the freedom to do so can be further limited by the
Commissioner’s authority to regulate packing pursuant to OCGA § 2-14-133. For
example, the Act provides that the Commissioner has the authority to prescribe a rule
or regulation “that no Vidalia onion may be shipped from the Vidalia onion
production area in bulk except as may be authorized by rule.” OCGA § 2-14-133 (a).
This holds true even if the Commissioner announces a shipping date and the onions
carry a U.S. No. 1 grade certificate.
We conclude, therefore, that the packing date rule is within the Commissioner’s
authority pursuant to OCGA § 2-14-133 and is not inconsistent with OCGA § 2-14-
136, as all authority to regulate packing and shipping rests with the Commissioner.
See, e. g., Georgia Oilmen’s Assoc. v. Georgia Dept. of Revenue, 261 Ga. App. 393,
395-396 (1) (a) (i) (582 SE2d 549) (2003) (Department of Revenue regulations
authorized by statute and do not conflict with other statutory law). We also conclude
that some evidence was presented to support a finding that the packing date rule is
reasonable in light of the testimony and letters received by the Commissioner
concerning the declining quality of the Vidalia onion and the threat to the industry.
See Albany Surgical, P.C. v Dept. of Community Health, 257 Ga. App. 636, 640 (1)
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(b) (572 SE2d 638) (2002) (“judicial review of the reasonableness of a regulation
under the second prong analysis is limited, because the regulation must be upheld if
the agency presents any evidence to support the regulation, although contrary
evidence is admitted by the challenging party.”[Cit.] (Emphasis supplied.)).
The trial court therefore erred in granting Bland Farms’ motion for judgment
on the pleadings, and in denying the Commissioner’s motion for summary judgment.
Judgment affirmed in part and reversed in part in Case No. A15A0042. Appeal
dismissed as moot in Case No. A15A1610. Phipps, C. J. and Doyle, P. J., concur.
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