Lion Raisins v. Ross

Filed 5/25/21
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
LION RAISINS, INC., et al., C086205
Plaintiffs and Appellants, (Super. Ct. Nos.
02AS01618 & 03AS05313)
v.
KAREN ROSS, as Secretary, etc.,
Defendant and Respondent.
THE PEOPLE ex rel. KAREN ROSS, as Secretary, C086206
etc.,
(Super. Ct. Nos.
Plaintiff, Cross-defendant and 34-2010-00067624-CU-MC-
Respondent, GDS & 34-2011-00106058-
CU-MC-GDS)
v.
RAISIN VALLEY FARMS, LLC, et al.,
Defendants, Cross-complainants and
Appellants.
* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of parts I, II, V, VI and VII.
1
APPEALS from judgments of the Superior Court of Sacramento County,
Raymond M. Cadei, Judge. Case No. C086205 dismissed. Case No. C086206 affirmed
as modified.
Bertram T. Kaufmann; Law Offices of Brian C. Leighton and Brian C. Leighton
for Plaintiffs and Appellants in Case No. C086205.
Law Offices of Brian C. Leighton and Brian C. Leighton for Defendants and
Appellants in case No. C086206.
Xavier Becerra, Attorney General, Robert W. Byrne, Assistant Attorney General,
Randy L. Barrow, Ali A. Karaouni, and Linda Gandara, Deputy Attorneys General for
Defendant and Respondent in case No. C086205 and Plaintiff and Respondent in case
No. C086206.
This appeal concerns a California Raisin Marketing Order (the Marketing Order)
first issued in 1998 by the California Department of Food and Agriculture (the
Department) under the California Marketing Act of 1937 (Food & Agr. Code, § 58601 et
seq.) (the CMA).1 The Marketing Order establishes a “California Raisin Marketing
Board” (the Board) and authorizes the Board to engage in research and promotional
activities to aid producers in reducing the costs of production and increasing demand for
California raisins. In accordance with the CMA, the Marketing Order is administered by
the Department and funded by mandatory assessments imposed on California raisin
producers.
The present appeal arises from two cases consolidated for purposes of trial. The
first case, Lion Raisins, Inc., et al. v. Ross, case No. C086205, involves a complaint for
declaratory and injunctive relief filed by Lion Raisins, Inc., et al. (collectively, Lion).
The Lion complaint, which challenges the validity of the Marketing Order on a wide
range of issues, seeks a declaration that the Marketing Order is unconstitutional and
1 Undesignated statutory references are to the Food and Agricultural Code.
2
invalid, an injunction against future assessments, and a refund of all assessments paid
since the 1999-2000 crop year.
The second case, People ex rel. Ross v. Raisin Valley Farms, LLC, et al., case No.
C086206, involves a complaint filed by the Department against Raisin Valley Farms,
LLC, et al. (collectively, Raisin Valley), to recover unpaid assessments, and a related
cross-complaint against the Department for declaratory, injunctive, and compensatory
relief.2 Similar to the Lion complaint, the Raisin Valley cross-complaint challenges the
validity of the Marketing Order on multiple grounds.
The trial court initially entered judgment against the Department on the
consolidated cases, concluding the Marketing Order was invalid because there was
insufficient evidence that the Marketing Order was necessary to address severe economic
conditions in the raisin industry. (People ex rel. Ross v. Raisin Valley Farms LLC (2015)
240 Cal.App.4th 1254, 1259 (Ross).) The Department appealed and we reversed,
concluding the trial court’s interpretation of the CMA was too narrow. (Ross, supra, at p.
1267.) We remanded the matter to the trial court for further proceedings consistent with
our opinion. (Ibid.)
On remand, after additional briefing, the trial court entered judgments in favor of
the Department, denying the challenges to the Marketing Order. Lion and Raisin Valley
appeal from those judgments, asserting numerous errors. First, appellants contend the
court erred in rejecting their claim that the Board’s promotional activities violated the
“varietal benefit” and “non-disparagement” provisions of the Marketing Order. Second,
appellants contend the court erred in concluding that the Raisin Bargaining Association
(the RBA) was lawfully allowed to bloc vote as a cooperative marketing association in
2 The Raisin Valley action, originally filed in Fresno County, was later transferred
to Sacramento County, where it was consolidated with another enforcement action filed
by the Department against successor entities to the original Raisin Valley parties.
3
referendums to approve the Marketing Order. Third, they contend the court erred in
concluding that the bloc-voting provisions of the CMA are constitutional. Fourth, they
contend that the court erred in allowing the Department to abandon its “cornerstone”
finding for the Marketing Order which, they argue, was not supported by the evidence.
Fifth, they contend the court erred in concluding the Department had no duty to consider
reasonable alternatives before adopting the Marketing Order. And finally, they contend
the court erred in rejecting their claim that the Marketing Order violates their
constitutional rights to free speech and free association.
With regard to the appeal in the Lion case, we shall modify the judgment to
dismiss the “varietal benefit” and “non-disparagement” claims due to appellants’ failure
to exhaust administrative remedies, and affirm the judgment as modified. We dismiss the
appeal in the Raisin Valley case as premature under the one final judgment rule.
BACKGROUND LAW
The CMA and its federal counterpart, the Agricultural Marketing Agreement Act
of 1937 (7 U.S.C. § 601 et seq) (the AMAA), were legislative responses to severe
problems encountered by the agricultural industry during the Great Depression. (Ross,
supra, 240 Cal.App.4th at p. 1257; see also Lion Raisins, Inc. v. United States (Fed. Cir.
2005) 416 F.3d 1356, 1358.) The programs were rooted in the legislative judgment that
governmental intervention was necessary to preserve the agricultural industry. (Ross, at
p. 1257.)
In enacting the CMA, the Legislature found that there was “ ‘unreasonable and
unnecessary economic waste’ ” of California’s agricultural wealth due to, among other
things, disorderly marketing of commodities, unfair competition in the marketing of
commodities, and the inability of producers to maintain present markets or develop new
or larger markets for California-grown commodities. (Voss v. Superior Court (1996) 46
Cal.App.4th 900, 907 (Voss); § 58651.) According to the Legislature, such conditions
“jeopardize the future continued production of adequate supplies of food . . . and prevent
4
producers from obtaining a fair return from their labor . . . .” (§ 58651.) Thus, in
enacting the CMA, the Legislature declared its intent to aid producers in preventing
economic waste, developing more efficient and equitable methods of marketing
commodities, and restoring and maintaining their purchasing power at a more adequate,
equitable, and reasonable level. (§ 58652.)
To effectuate its purposes, the CMA authorizes the Secretary of the Department
(formerly the Director of Agriculture of the State of California) to enter into “ ‘marketing
agreements’ ” and issue “ ‘marketing orders.’ ”3 (Gerawan Farming, Inc. v. Lyons
(2000) 24 Cal.4th 468, 478-479.) A “marketing agreement” is a contract-like
arrangement binding only upon the signatories to the agreement, which governs the
marketing and handling of such commodity. (Id. at p. 478; § 58745.) A “marketing
order,” in contrast, regulates all persons engaged in the marketing, processing,
distributing, or handling of the commodity. (Gerawan Farming, supra, at pp. 478-479;
§§ 58615, 58712, 58741, 58743, 58881.)
The CMA authorizes marketing orders that control, among other things, the
quantity or quality of any commodity produced for market. (Ross, supra, 240
Cal.App.4th at p. 1257; §§ 58881-58888; 7 U.S.C. § 608c(6).) The CMA also separately
authorizes marketing orders that establish “plans for advertising and sales promotion to
maintain present markets or to create new or larger markets for any commodity . . . .”
(§ 58889, subd. (a); Ross, at p. 1257.)
The CMA provides that any advertising or promotional plan must be generic and
“directed toward increasing the sale of the commodity without reference to any private
brand or trade name that is used by any handler with respect to the commodity regulated
by the marketing order . . . .” (§ 58889, subd. (b).) The CMA prohibits advertising or
3 For simplicity, we hereafter refer to both the Department and its Secretary
collectively as “the Department.”
5
sales promotion programs that make “false or unwarranted claims in behalf of any
product, or disparages the quality, value, sale, or use of any other commodity.” (§ 58889,
subd. (d).)
Funding of a marketing order comes from the producers or handlers directly
affected by it. (Ross, supra, 240 Cal.App.4th at pp. 1257-1258.) The CMA gives the
Department the power to levy and collect from each affected producer or handler an
assessment calculated to defray the costs of the order. (§§ 58921, 58925, 58926, 58929.)
The CMA describes the procedure for adopting a marketing order. It provides that
whenever the Department has reason to believe that a marketing order (or amendments to
a marketing order) will promote the policy of the CMA with respect to any commodity,
the Department shall give notice and hold a hearing. (§§ 58771, 58782; see also §§
58773-58781, 58783-58788.) The notice must include the date and place of the hearing,
the commodity and area covered by the proposed marketing order, and a statement that
the Department will receive, at the hearing, evidence about the subjects for which the
Department is required to make findings as a precondition to the issuance of an order.
(§ 58774.)
The hearing on a proposed marketing order must be public, and all testimony must
be received under oath. (§ 58782; see also § 58786.) The CMA requires the Department
to consider all relevant matter presented at the hearing and to preserve a complete record
of the proceedings for judicial review. (§§ 58782, 58783, 58787; Voss, supra, 46
Cal.App.4th at p. 924.) Upon conclusion of the hearing, but prior to issuing a marketing
order, the Department must make specific findings appropriate for the type of order
proposed. (§§ 58811-58813; Ross, supra, 240 Cal.App.4th at p. 1258.)
To adopt a marketing order with provisions for advertising, sales promotion, or
research, the Department must find that: (1) the proposed marketing order will “tend to
effectuate” the declared purposes and policies of the CMA; (2) the proposed marketing
order is reasonably calculated to attain the objectives sought in the order; and (3) the
6
powers under the CMA are being exercised only to the extent necessary to attain such
objectives. (§ 58813, subds. (a)-(c).) These findings must be based on the facts,
testimony, and evidence received at the hearing, “together with any other relevant facts
which are available to [the Department] from official publications or institutions of
recognized standing.” (§ 58813.)
Even if the Department makes the required findings, a marketing order will not
become effective unless it is approved by the prescribed percentage of persons affected
by the order. (§§ 58991-58993.) The Department may elect whether such approval shall
be determined by written assent or by referendum. (§§ 58786, 58787, 58991-58998.)4
For a referendum to be valid, at least 40 percent of eligible affected producers
must vote. (§ 58993, subd. (c).) For the referendum to pass, it must be approved by
either (1) at least 65 percent of the voters, representing not less than 51 percent of the
total quantity of the commodity produced for market, or (2) at least 51 percent of the
voters, representing not less than 65 percent of the total quantity of the commodity
produced for market. (§ 58993, subd. (c).) The CMA permits “any nonprofit agricultural
cooperative marketing association, which is authorized by its members so to assent,” to
bloc vote on behalf of that association’s members. (§ 58999.)
Approved marketing orders are administered and enforced by the Department.
(§ 58711.) But the CMA requires that marketing orders establish an advisory board to
assist the Department in the administration of the order. (§§ 58841, 58842.) The
advisory board’s duties include recommending rules and regulations, receiving and
reporting complaints of violations of the marketing order, and assisting in preparing
budgets and collecting funds to cover expenses. (§§ 58846, 58923.)
4 The CMA sets out the standards for approval by written assent for producers
(§ 58993), processors (§ 58992) and handlers (§ 58991). (Voss, supra, 46 Cal.App.4th at
p. 918, fn. 9.)
7
Members of an advisory board may be nominated by the affected producers and
handlers, but are appointed by, and serve at the pleasure of, the Department. (§ 58841.)
While the members of an advisory board generally must represent the agricultural
industry covered by the marketing order, the Department may appoint one person to
represent the public. (§§ 58842-58843.) For any marketing order affecting raisin
producers, the Department also must appoint one advisory board member to represent
“cooperative bargaining associations.” (§ 58842.5; see also § 54401 [defining
“cooperative bargaining association”].)
A marketing order has no fixed lifespan. (Voss, supra, 46 Cal.App.4th at p. 921.)
It can be terminated at any time and must, at minimum, be reapproved every five years.
(§§ 59081, 59082, 59086.)
BACKGROUND FACTS AND PROCEDURE
The challenged Marketing Order
For decades, until the early 1990’s, there was a state marketing order for raisins
administered by the California Raisin Advisory Board, best known for creating the
“Dancing Raisins” promotional campaign. However, due to disagreements between the
producers (growers) and independent packers, the prior marketing order was terminated
in 1994.
At the time the prior marketing order was terminated, California’s raisin industry
was experiencing persistent oversupplies of raisins. Although the federal government
had implemented programs to reduce the oversupply, the programs had the effect of
reducing producer profits. Thus, many participants in the raisin industry, including the
RBA and Sun-Maid Growers of California (Sun-Maid), a large cooperative marketing
association, were supportive of a new state marketing order.
In March of 1998, the RBA and Sun-Maid, collectively representing a majority of
the producers in the raisin industry, proposed a new Marketing Order designed to
increase demand for raisins. The proposed Marketing Order declared that the “inability
8
to maintain or expand present markets, or to develop new or larger markets results in an
unreasonable and unnecessary waste of the [state’s] agricultural wealth,” and that it is
“therefore in the public interest for the producers of California raisins to establish a
[marketing board] to conduct market development activities to improve the demand for
all categories of raisin usage . . . .” To further this goal, the proposed Marketing Order
would authorize a research and promotional program administered by the Department
and funded by an assessment on raisin producers.5
To help the Department administer the program, the proposed Marketing Order
established a Board consisting of 15 members, 13 of whom must be producers or persons
authorized to represent the producers (the producer members), with one member
representing the general public, and one member representing the largest cooperative
bargaining association (here, the RBA). The Marketing Order specifies that nominations
and appointments of the producer members must be made from three groups—
cooperative marketing associations, cooperative bargaining associations, and other (i.e.,
independent) producers—based on each group’s proportional share of raisin production.6
The Marketing Order provides that the Board may take action by majority vote of the
quorum, except on fiscal matters, which requires a vote of eight members. The
Marketing Order states that all activities of the Board shall be equally available to all
producers of California raisins, and that the Board shall plan its activities to benefit each
variety of raisin in proportion to the assessments paid by the producers of that variety.
5 The Board’s research and promotional activities are funded by a uniform
assessment on producers of approximately 2 percent of the field price on each ton of
“free tonnage” raisins delivered to packers (i.e., raisins not subject to the reserve pool).
6 In practice, this has resulted in Sun-Maid members holding three to four seats, the
RBA members holding four to five seats, the RBA itself holding one seat, and
independent producers holding five to six seats of the fourteen nonpublic member seats
on the Board.
9
In accordance with the CMA, the Department held a public hearing on the
proposed Marketing Order, receiving testimony from 16 witnesses. Following the
hearing, and receipt of additional written comments, the Department adopted “economic
findings” in support of the proposed Marketing Order.
In its findings, the Department listed the policies and purposes of the CMA, as
described in sections 58652 and 58654, and then found that the Marketing Order would
tend to effectuate those policies and purposes by funding research regarding the potential
health benefits of raisins, educating the public about the versatility and healthful
properties of raisins, and fostering efficient marketing and promotion of raisins, so as to
increase the demand for raisins, better correlate raisin supply with demand, decrease
economic waste, and increase the purchasing power of raisin producers. Based on its
findings, the Department issued the proposed Marketing Order subject to the approval by
referendum of the affected raisin producers.
Between June and July of 1998, the Department held the required referendum.
For purposes of voting on the referendum, the Department took the position that Sun-
Maid and the RBA could elect to bloc vote on behalf of their membership as “cooperative
marketing associations” under section 58999. Both Sun-Maid and the RBA elected to
bloc vote, although both also allowed their members to “opt out” and vote separately if
they wished. Based on the voting results of the referendum, the Marketing Order was
approved.
In 2001, the Department held the first “continuation” (reapproval) referendum on
the Marketing Order. For the 2001 referendum, neither Sun-Maid nor the RBA elected to
bloc vote. Nevertheless, producers overwhelmingly voted to continue the Marketing
Order.
At the next continuation referendum, in 2006, the Marketing Order again was
approved. For the 2006 referendum, both Sun-Maid and the RBA elected to bloc vote.
10
The Board’s advertising program
Since its inception, the Board’s advertising and promotion has been a generic
program focusing on the virtues of California raisins generally, without reference to
particular brands or sellers. The Board’s first major campaign, entitled “Look Who’s
Cooking with California Raisins,” focused on using celebrity chefs to promote new uses
for raisins. Subsequent campaigns included the “Wise Choice” campaign, which was
designed to show how raisins could be used by people looking for “healthy, nutritious
foods on the go,” and the “Solar Powered Goodness” campaign, which emphasized the
benefits of eating natural, sun-dried fruit.
The Board also maintains a Web site and produces brochures. Prior to 2010, some
of the Web pages and brochures referred to Thompson seedless raisins and mentioned the
“tray-drying” method. In addition, the phrase “Thompson Seedless Grapes make the best
California raisins” was used in a promotional blurb in a brochure and posted in a few
places on the Board’s approximately 1,260-page Web site. The materials containing
these references constituted a small part of the Board’s promotional materials. The Board
has since updated the materials to remove the phrase that “Thompson Seedless Grapes
make the best California raisins,” to replace references to “Thompson Seedless” grapes
with “Natural Seedless” grapes, and to include “dried-on-the-vine” methods of drying
raisins.
Trial and first appeal
When the Lion complaint originally was filed in 2002, it challenged the Marketing
Order only on free speech/free association grounds. That case was then stayed for
several years pending the outcome of certain appellate cases.7 By 2011, when the stay
was lifted, the legal landscape for free speech claims had shifted. This was due, in part,
7 During the pendency of the stay, the parties agreed to escrow the entire amount of
Lion’s assessments due under the Marketing Order.
11
to the United States Supreme Court’s decision in Johanns v. Livestock Marketing Assn.
(2005) 544 U.S. 550 [161 L.Ed.2d 896] (Johanns), holding that the government’s own
speech is not susceptible to a First Amendment-compelled subsidy challenge. (Id. at p.
559; see also Gallo Cattle Co. v. Kawamura (2008) 159 Cal.App.4th 948, 951-952 (Gallo
Cattle) [following Johanns].) Thus, in 2011, Lion was granted leave to amend its
complaint to include additional challenges to the Marketing Order.
As amended, the Lion complaint alleged five causes of action. The first two
causes of action alleged the Marketing Order violates the free speech and free association
clauses of the California Constitution. The third cause of action alleged a violation of
liberty interests protected by the federal and state due process clause. The fourth cause of
action alleged a violation of the Marketing Order based on the “varietal benefit”
provisions in section 58749. The fifth cause of action alleged that allowing the RBA to
bloc vote was unlawful and an invalid exercise of the police power.
The Department’s complaint against Raisin Valley alleged that the defendants had
improperly failed and refused to remit assessments due under the Marketing Order. The
Department sought an injunction enjoining Raisin Valley from committing further
violations of the Marketing Order and compelling Raisin Valley to pay overdue
assessments (plus costs and penalties).
Raisin Valley’s amended cross-complaint alleged nine causes of action against the
Department. The first cause of action alleged the Marketing Order violates the police
power because the Board’s membership was inconsistent with section 58842.5. The
second cause of action alleged the Marketing Order violates the police power because its
reapproval provisions were inconsistent with sections 58993 and 59086. The third cause
of action alleged the Marketing Order is invalid because the Department allowed the
RBA to bloc vote, in violation of section 58999 (and/or due process). The fourth, fifth,
sixth, and seventh causes of action alleged the CMA’s bloc-voting provisions violate the
state and federal equal protection clauses, federal free association rights, and federal due
12
process. The eighth and ninth causes of action alleged that the Marketing Order violates
the state constitutional rights of free speech and free association, and state and federal
due process, by compelling appellants to subsidize the speech of, and associate with, the
Board.
In 2013, following a 19-day bench trial, and posttrial briefing, the court granted
judgment for the appellants. Although numerous issues were presented by the parties, the
trial court’s judgment rested on a single issue—a finding that the record lacked sufficient
evidence to support the finding that the Marketing Order would “ ‘tend to effectuate the
declared purposes and policies’ ” of the CMA. (Ross, supra, 240 Cal.App.4th at p.
1256.)
Relying on the legislative findings of the CMA, the bulk of which were adopted
during the Great Depression, the trial court concluded that the Department cannot adopt a
marketing order under the CMA unless the order is necessary to address adverse
economic conditions so severe as to threaten the continued viability of the industry.
(Ross, supra, 240 Cal.App.4th at pp. 1264-1265.) The trial court found no evidence in
the record before it that the raisin industry was suffering from a severe economic crisis.
(Id. at p. 1259.) Thus, the trial court found the Department’s Marketing Order was
invalid and that the Department improperly exercised its police power in adopting the
order. (Id. at p. 1256.)
In Ross, supra, 240 Cal.App.4th at pages 1256-1257, we reversed the trial court’s
judgment. We held the trial court erred in construing section 58813, subdivision (b) to be
met only if a marketing order was necessary to address a severe economic crisis. (Ross,
at p. 1267.) We noted that subsequent to its adoption, the CMA was amended to divide
marketing orders into “two camps: those that restrict the supply of a commodity (i.e.,
restrict quantity), and those that do not.” (Ross, at p. 1265.) As a result of that
amendment, only marketing orders that restrict the supply of a commodity “require
economic findings concerning the correlation of supply and demand and a particular level
13
of producer purchasing power, as well as the consideration of particular economic
factors . . . .” (Id. at p. 1258; §§ 58811 & 58812.)
We held that marketing orders that do not restrict supply—including orders for
advertising, sales promotion, or research—do not require economic findings concerning
the correlation of supply and demand and a particular level of purchasing power, or the
consideration of particular economic factors. (Ross, supra, 240 Cal.App.4th at pp. 1258,
1265-1266.) Instead, such orders are valid as long as they are supported by “generalized
findings” that the order will “ ‘tend to effectuate’ ” the purposes and policies of the
CMA.8 (Ross, at pp. 1265-1266; § 58813.) Thus, we reversed and remanded for further
proceedings consistent with our opinion. (Ross, at p. 1267.)
The court’s decision after remand
On remand, the trial court reconsidered whether there was sufficient evidence to
support the Department’s finding that the Marketing Order would tend to effectuate the
purposes and policies of the CMA. Applying a broader interpretation of section 58813,
the court concluded that there was substantial evidence to support that finding.
The trial court then addressed the “remaining challenges” to the Marketing Order,
which it identified as (1) whether the Department violated section 58999 by allowing the
RBA to bloc vote; (2) whether section 58999 is unconstitutional; (3) whether the
Marketing Order violated appellants’ free speech or free association rights; (4) whether
the Board’s advertising program violated the Marketing Order by failing to equally
promote and/or disparaging dried-on-the-vine raisins; and (5) whether the Marketing
Order is invalid because the Department failed to consider reasonable alternatives to the
Marketing Order before adopting it. After further briefing, the court issued its final
8 We also noted that a marketing order need not effectuate all the purposes and
policies of the CMA, “something that would not be practicable.” (Ross, supra, 240
Cal.App.4th at p. 1264, fn. 7.)
14
statement of decision, finding for the Department on all remaining issues. Both Lion and
Raisin Valley timely appealed the court’s judgment in each of their respective cases.
DISCUSSION
I
The Raisin Valley Appeal
As a threshold matter, we must consider whether we have jurisdiction over the
Raisin Valley appeal in view of the fact that the judgment in the Raisin Valley case fails
to dispose of the Department’s claims against Raisin Valley.
“An appealable judgment is a jurisdictional prerequisite to an appeal. [Citation.]”
(Martis Camp Community Assn. v. County of Placer (2020) 53 Cal.App.5th 569, 587.)
“Under the ‘one final judgment’ rule, an order or judgment that fails to dispose of all
claims between the litigants is not appealable. [Citations.]” (Ibid.)
At our request, the parties briefed the question whether the judgments at issue here
are appealable. In a joint supplemental brief, the parties all agree that the Raisin Valley
judgment is not final and the appeal should be dismissed. They contend, however, that
the Lion appeal, which was consolidated only for purposes of trial, involves a final
judgment and should not be dismissed. We agree. We therefore dismiss the appeal in the
Raisin Valley case and limit our discussion to the claims in the Lion case.
II
Failure to Exhaust Administrative Remedies
Before turning to the merits of the Lion appellants’ claims, we first address the
Department’s argument that several claims are barred because appellants failed to
exhaust available administrative remedies under section 59240 of the CMA and the
Marketing Order. In particular, the Department argues that the Lion appellants (hereafter
referred to as appellants) failed to exhaust their claims that (1) the Board’s marketing
activities disparaged and failed to promote appellants’ dried-on-the-vine raisins, and
(2) the Department unlawfully permitted bloc voting.
15
The rule of exhaustion is well established in California. “In brief, the rule is that
where an administrative remedy is provided by statute, relief must be sought from the
administrative body and this remedy exhausted before the courts will act.” (Abelleira v.
District Court of Appeal (1941) 17 Cal.2d 280, 292; accord, City of Sacramento v. State
Water Resources Control Bd. (1992) 2 Cal.App.4th 960, 969; see also Dunham v. City of
Westminster (1962) 202 Cal.App.2d 245, 249-250 [rule of exhaustion applies to
declaratory relief claims].) This is not a matter of judicial discretion, but a jurisdictional
prerequisite to resort to the courts. (City of Sacramento, supra, at p. 969; California
Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1151.)
The primary purpose of the rule is to lighten the burden of overworked courts and
provide administrative agencies with the opportunity to decide matters within their area
of expertise prior to judicial review. (California Native Plant Society v. City of Rancho
Cordova (2009) 172 Cal.App.4th 603, 616; Sierra Club v. San Joaquin Local Agency
Formation Com. (1999) 21 Cal.4th 489, 501.) Even where the administrative remedy
may not provide complete relief, the doctrine is still “viewed with favor ‘because it
facilitates the development of a complete record that draws on administrative expertise
and promotes judicial efficiency.’ ” (Sierra Club, supra, at p. 501.)
Appellants bear the burden of demonstrating that the issues raised in the judicial
proceeding were first raised at the administrative level. (Monterey Coastkeeper v. State
Water Resources Control Bd. (2018) 28 Cal.App.5th 342, 359; Westinghouse Elec. Corp.
v. County of Los Angeles (1974) 42 Cal.App.3d 32, 37.) We exercise our independent
judgment on the legal question of whether the doctrine applies in a given case.
(Monterey Coastkeeper, supra, at p. 359.)
Here, we conclude that appellants have failed to exhaust their available
administrative remedies as to their product disparagement/failure to promote claim.
Under section 59240 of the CMA, any interested party may file an administrative
complaint alleging “any violation” of the CMA or a marketing order, rule, or regulation
16
issued by the Department. When such a complaint is filed, the Secretary either must refer
the matter to the Attorney General or a district attorney for the institution of legal
proceedings, or hold an evidentiary hearing to consider the claim. (§§ 59240, 59242,
59244, 59245.)
The Marketing Order also contains its own appeal procedure under which “[a]ny
producer . . . who believes that any act or determination by or on behalf of the Board, its
committees or staff has been or will be detrimental or adverse to the producer’s interests
. . . may petition the Department to . . . correct the detrimental or adverse impact.” If the
Department finds that “the Board has acted in a fashion inconsistent with [the CMA], or
this Marketing Order or that the Board has implemented the Marketing Order in an
unreasonably discriminatory, unfair or inequitable manner,” the Department shall declare
the challenged act or determination to be without force and effect, and may order the
Board to take steps to correct any harm suffered by the petitioner. (See Brock v. Superior
Court (1952) 109 Cal.App.2d 594, 610 [finding failure to exhaust based on appeal
procedure in marketing order]; People for Ethical Treatment of Animals, Inc. v.
California Milk Producers Advisory Bd. (2005) 125 Cal.App.4th 871, 882, fn. 10 [noting
requirement to exhaust under section 59240].)
Appellants failed to meet their burden of proving that they exhausted either of
these administrative remedies with respect to their disparagement claim. Appellants have
not cited, and we have not found, any evidence that they filed an administrative petition
or complaint with the Department objecting to the Board’s marketing activities or the
bloc-voting provisions.9 Accordingly, appellants failed to exhaust their administrative
remedies.
9 We acknowledge that Bruce Lion and others submitted a letter to the Department
in May 1998 seeking assurances that there would be proportional funding of dehydrated
raisins, but the letter was directed to the terms of the proposed Marketing Order, and was
17
Appellants argue they should be excused from pursuing their administrative
remedies because exhaustion would have been futile. We are unpersuaded. Futility is a
narrow exception which applies only when the party invoking the exception “can
positively state that the administrative agency has declared what its ruling will be in a
particular case.” (Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1313.)
That was not the case here. If the Board was not fulfilling the Marketing Order’s
“promise” for proportionate promotion of dried-on-the-vine raisins, as appellants argue, it
was incumbent on them to bring that charge to the Department to take steps to correct the
purported violation.10 Because they failed to do so, we conclude appellants failed to
exhaust their administrative remedies with respect to the “varietal benefit” and “non-
disparagement” claims, depriving the Department of the opportunity to develop a factual
record and apply its expertise to the issues raised.11 Thus, the claim is not properly
before this court and should be dismissed.12
We reach a different conclusion regarding the bloc-voting claims. We conclude
appellants’ failure to exhaust those claims must be excused because the available
administrative remedies were inadequate to address them. (California Water Impact
not complaining about the Board’s implementation of the approved Marketing Order.
Thus, the letter is not relevant to the claim in appellants’ complaint alleging violations of
the Marketing Order.
10 Indeed, if the Board’s promotional activities are violating the terms of the
Marketing Order, the appropriate remedy seemingly would be to change the promotional
activities rather than suspend or terminate the Marketing Order.
11 It matters not that the trial court did not rule on this issue, because exhaustion
presents a pure question of law. (Evans v. City of San Jose (2005) 128 Cal.App.4th 1123,
1136.)
12 As an alternative ground, we also conclude that appellants forfeited any challenge
to the sufficiency of the evidence regarding their promotion/disparagement claim by
failing to set forth in their brief all of the material evidence relating to that issue,
including much of the evidence on which the trial court relied in its statement of decision.
18
Network v. Newhall County Water Dist. (2008) 161 Cal.App.4th 1464, 1490 [exhaustion
is not required when the available administrative remedy is inadequate].) The Marketing
Order’s appeal procedure was inadequate because, by its terms, the appeal procedure
applies only to acts or determinations “by or on behalf of the Board,” whereas the bloc-
voting claims were concerned with actions taken by the Department, not the Board.
For similar reasons, we conclude the administrative hearing procedure in section
59240 was inadequate. Under that procedure, when an administrative hearing is held, the
hearing must be conducted by, and findings issued by, the Department’s Secretary. (§§
59244, 59245.) But such a procedure is inappropriate where, as here, the Department
itself is claimed to have engaged in wrongdoing. Under such circumstances, the
Department essentially would be asked to judge the correctness of its own decisions,
which would be contrary to due process. (See, e.g., Today’s Fresh Start, Inc. v. Los
Angeles County Office of Education (2013) 57 Cal.4th 197, 223; Brown v. City of Los
Angeles (2002) 102 Cal.App.4th 155, 177.) Accordingly, we construe section 59240
more narrowly, giving the Department authority to enforce violations against private
parties, but not allowing the Department’s Secretary to resolve complaints against the
Department itself.13 Applying this construction to this case, we agree with appellants
that they were not required to exhaust their claims against the Department related to the
bloc-voting provisions of the CMA.
13 We find further support for this interpretation in the language of former section
1300.19, the predecessor to section 59240, which prescribed criminal and civil penalties
when a “ ‘person’ ” violated a marketing order issued “ ‘by the director.’ ” (People v.
Harter Packing Co. (1958) 160 Cal.App.2d 464, 467.)
19
III
Violation of Section 58999
Under section 58999, only a “nonprofit agricultural cooperative marketing
association” is entitled to bloc vote on behalf of its members. (§ 58999.) That term,
however, is not defined. Before the Department promulgated the Marketing Order,
Department staff considered whether the RBA was a cooperative marketing association
for purposes of section 58999, and determined that it was.14 After hearing the evidence
at trial, the court below reached the same conclusion. On appeal, appellants argue the
trial court erred because the RBA was a bargaining association, not a marketing
association, and therefore the RBA should not have been permitted to bloc vote in the
referendums. The Department, in turn, argues the RBA was both a bargaining
association and a marketing association, and therefore entitled to bloc vote.
To resolve this claim, we must answer the following two questions: (1) whether a
cooperative bargaining association may qualify as a cooperative marketing association
within the meaning of section 58999 and, if so, (2) whether the RBA qualified as a
marketing association because it was involved in marketing.
“ ‘In construing a statute, our fundamental task is to ascertain the Legislature’s
intent so as to effectuate the purpose of the statute. [Citation.] We begin with the
language of the statute, giving the words their usual and ordinary meaning. [Citation.]
14 Prior to the initial referendum on the proposed Marketing Order, the RBA enlisted
Dr. Leon Garoyan, Ph.D., the Director of the University of California Center for
Cooperatives, to investigate the RBA’s authority to bloc vote. Dr. Garoyan concluded
that the RBA was authorized to bloc vote, and prepared a memorandum explaining the
bases for his conclusion, which relied on the RBA’s articles of incorporation, bylaws,
membership agreement, and master contract with processors/packers. The RBA then
presented Dr. Garoyan’s memorandum to the Department. Thus, there was evidence
before the Department to support its determination that the RBA was authorized to bloc
vote.
20
The language must be construed “in the context of the statute as a whole and the overall
statutory scheme, and we give ‘significance to every word, phrase, sentence, and part of
an act in pursuance of the legislative purpose.’ ” [Citation.] In other words, “ ‘we do not
construe statutes in isolation, but rather read every statute “with reference to the entire
scheme of law of which it is part so that the whole may be harmonized and retain
effectiveness.” [Citation.]’ ” [Citation.] If the statutory terms are ambiguous, we may
examine extrinsic sources, including the ostensible objects to be achieved and the
legislative history. [Citation.] In such circumstances, we choose the construction that
comports most closely with the Legislature’s apparent intent, endeavoring to promote
rather than defeat the statute’s general purpose, and avoiding a construction that would
lead to absurd consequences. [Citation.]’ [Citation.]” (Estate of Kelly (2009) 172
Cal.App.4th 1367, 1373.)
Our focus here is on section 58999’s use of the term “nonprofit agricultural
cooperative marketing association,” which we logically may conclude is a nonprofit
agricultural cooperative association involved in “marketing.” (§§ 54002, 54033, 54036,
54037.) The relevant question, then, is how to define “marketing.”
As noted, neither the CMA nor California’s cooperative association laws directly
define “marketing” or a “marketing association,” but the CMA’s general definitions do
provide helpful guidance. Among other terms, the CMA broadly defines “producer
marketing” to mean “any or all operations which are performed by any producer in
preparing [a commodity] for market. It includes selling, delivering, or disposing of for
commercial purposes, to any handler any commodity which the producer has produced.”
(§ 58621; accord, § 58614; see also § 66537.) Likewise, under section 58620, a
“producer” is defined to mean any person engaged in the business of producing a
commodity “for market” (§ 58620), and is distinguished from “handlers” or “processors,”
which may engage in their own marketing. (§§ 58611, 58619, 58712, 58741, 58881; see
also §§ 54039, 54261 [referring to agreements between cooperative associations and their
21
members as a “marketing contracts”].) These definitions show, contrary to what
appellants argue, that “marketing” is not limited to sales of “processed” raisins. Rather,
producers may engage in “marketing” merely by selling or delivering the commodity to a
handler for commercial purposes.
We find further support for this conclusion in the language of section 58993, under
which no marketing order which directly affects producers is effective until approved by
the specified percentage of producers affected by the order. The statute provides that for
a referendum to pass, it must be approved by producers which “marketed” not less than
51 percent (or, in some cases, not less than 65 percent) of the total quantity of the
commodity in the relevant season. (§ 58993, subd. (c).) Again, we find the CMA’s use
of the term “marketing” inconsistent with appellants’ argument that a marketing
association must process raisins or sell processed raisins.
Our construction also is consistent with the ordinary definition of the word
“marketing.” In its broadest sense, the dictionary defines marketing as the “aggregate of
functions involved in moving goods from producer to consumer.” (Merriam-Webster’s
Online Dictionary < https://www.merriam-webster.com/dictionary/marketing> [as of
May 21, 2021], archived at ; see Wasatch Property
Management v. Degrate (2005) 35 Cal.4th 1111, 1121-1122 [“When attempting to
ascertain the ordinary, usual meaning of a word, courts appropriately refer to the
dictionary definition of that word”].)
We are not aware of any cases construing the meaning of the term “marketing” for
purposes of the CMA, but courts have construed that term for purposes of the Capper-
Volstead Act (7 U.S.C. §§ 291, 292), which provides limited antitrust immunity for
cooperatives that market their members’ products. In Treasure Valley Potato Bargaining
Assn. v. Ore-Ida Foods, Inc. (9th Cir. 1974) 497 F.2d 203, the Ninth Circuit held that two
bargaining associations, the principal function of which was to bargain collectively for
prices, terms, and conditions of preseason potato contracts, were entitled to antitrust
22
immunity even though they did not process, handle, buy, or sell any potatoes. The court
reasoned that the associations were entitled to immunity because they performed
marketing functions “in bargaining for the sales to be made by their individual members,”
which “necessarily requires supplying market information and performing other acts that
are part of the aggregate of functions involved in the transferring of title to the potatoes.”
(Id. at p. 215; accord, Northern California Supermarkets, Inc. v. Central California
Lettuce Producers Cooperative (N.D.Cal. 1976) 413 F.Supp. 984, 991-992.)
This brings us back to the language of section 58999, which provides: “In finding
whether [a] marketing order . . . is . . . approved or favored by producers . . . , the
[Secretary] shall consider the approval of any nonprofit agricultural cooperative
marketing association, which is authorized by its members so to assent, as being the
assent, approval, or favor of the producers that are members of, or stockholders in, that
nonprofit agricultural cooperative marketing association.” (§ 58999.) Because the
purpose of the statute is limited to the approval of marketing orders by affected
producers, which themselves must have “marketed” the commodity, it is logical to
construe the term “marketing” to include “producer marketing” as defined in section
58621. It follows that for purposes of section 58999, a cooperative marketing association
includes an association involved in selling or delivering commodities to handlers for
commercial purposes. On its face, this may include a cooperative bargaining association,
which is an association organized and functioning “for the purpose of group bargaining
between its producer members and the first handler or processor, with respect to the sale
of any agricultural commodity . . . .”15 (§ 54401.)
15 In reaching this conclusion, we have not considered appellants’ arguments based
on the “literature on bargaining and marketing cooperatives,” which were raised for the
first time in their reply brief.
23
Appellants argue that federal law and the state Marketing Order distinguish
between marketing and bargaining associations for purposes of selecting members for the
advisory board/committee. Appellants are correct (see, e.g., §§ 58841-58842.5), but they
do not explain why this should control the interpretation of a statute which uses different
language and has nothing to do with allocating seats on the advisory board.16
Appellants also suggest that an organization cannot be both a bargaining
association and a marketing association. But appellants have not cited any authority to
support their claim that a bargaining association cannot also be a marketing association
for purposes of the bloc-voting provisions in section 58999. Accordingly, we conclude,
as did the trial court, that a cooperative bargaining association may qualify as a
cooperative marketing association within the meaning of section 58999 if it is involved in
marketing.
Having so concluded, we next consider whether the trial court correctly concluded
that the RBA was a marketing association because it was involved in marketing. As
appellants acknowledge, the facts relating to the RBA’s organization and operations are
not in dispute. The interpretation and application of a statute to an undisputed set of facts
is a question of law, subject to de novo review. (Stanford Vina Ranch Irrigation Co. v.
State of California (2020) 50 Cal.App.5th 976, 998.)
The evidence in the record shows that the RBA was formed as a nonprofit
agricultural cooperative association authorized to render “selling” and “marketing”
services to its members. The RBA’s bylaws specifically authorize it to “assent in writing
or otherwise, on behalf of the members of [the RBA] and all producers of products
16 Under federal law and the raisin Marketing Order, only members of a cooperative
marketing association engaged in the processing/handling of raisins are eligible for a
representative seat on the advisory board/committee. (7 C.F.R. §§ 989.17, 989.26, subd.
(a); cf. 7 C.F.R. § 989.12a.)
24
marketed or to be marketed by [the RBA], to any marketing order or amendment
thereto . . . .” The RBA membership agreement, which sets forth the terms of
membership, provides that the purpose of the association is to allow growers throughout
the state to “more efficiently and economically market” their products by joining together
in a cooperative association. To further this purpose, the membership agreement
provides that the producer members shall sell and deliver their product to the RBA,
which shall take delivery of the product and then sell it to processors or packers at prices
determined by the RBA.17
Although deliveries to processors are made in the name of the producer, and most
of the purchase price is paid directly to the producer, the actual sale is between the RBA
and the processor/packer. Title and the right to possession of the product passes from the
producer to the RBA, and then from the RBA to the processor/packer. Members can
express preferences respecting the processor/packer to which they wish to deliver their
product, but the RBA has the ultimate authority to decide where the product is delivered.
And the RBA has the “sole discretion” to determine the price at which the product is
sold.
Based on these facts, we conclude the trial court correctly determined that the
RBA was a marketing association. Thus, we uphold the trial court’s conclusion that the
RBA was authorized to bloc vote under section 58999.
17 The RBA permits individual producers to market their product directly, but any
such individual agreements must be consistent with the terms and conditions of the
membership agreement and the master contract between the RBA and the signatory
processors/packers.
25
IV
Constitutional Challenge to Section 58999
In addition to arguing that the Department violated section 58999 by permitting
the RBA to bloc vote as a nonprofit agricultural cooperative marketing association,
appellants challenge the constitutionality of the bloc-voting statute itself. Appellants
contend section 58999 violates the equal protection clause because it gives cooperative
marketing associations, such as Sun-Maid, disproportional voting power.18 We are
unpersuaded.
The critical first step when determining whether state legislation violates the equal
protection clause is to determine the appropriate level of judicial scrutiny to be applied.19
(Southern Cal. Rapid Transit Dist. v. Bolen (1992) 1 Cal.4th 654, 664 (Bolen).) “ ‘The
general rule is that legislation is presumed to be valid and will be sustained if the
classification drawn by the statute is rationally related to a legitimate state interest.
[Citations.]’ ” (Sacramentans for Fair Planning v. City of Sacramento (2019) 37
Cal.App.5th 698, 710, italics omitted.)
In the typical equal protection case involving social welfare or economic
legislation, the classification need only bear a rational relationship to a conceivable
legitimate state purpose. (Hernandez v. City of Hanford (2007) 41 Cal.4th 279, 298-299;
Board of Supervisors v. Local Agency Formation Com. (1992) 3 Cal.4th 903, 913 (Board
18 Although the Lion complaint alleged an improper exercise of the police power,
and did not use the term “equal protection,” we liberally construe the complaint to
include a claim that the statute is an invalid exercise of the police power because it
violates the right to equal protection under the law. (Aden v. Younger (1976) 57
Cal.App.3d 662, 673 [equal protection clause is a limitation on the police power].)
19 The equal protection clauses in the federal and state Constitutions (U.S. Const.,
14th Amend.; Cal. Const., art. I, § 7, subd. (a)) guarantee substantially similar rights, and
courts analyze them in a similar fashion. (Griffiths v. Superior Court (2002) 96
Cal.App.4th 757, 775.)
26
of Supervisors).) On the other hand, statutes which create suspect classifications or
impinge on fundamental rights are subjected to strict scrutiny. (Hernandez, supra, 41
Cal.4th at p. 299.) “Under this very severe standard, a discriminatory law will not be
given effect unless its classification bears a close relation to the promoting of a
compelling state interest, the classification is necessary to achieve the government’s goal,
and the classification is narrowly drawn to achieve the goal by the least restrictive means
possible. [Citations.]” (Board of Supervisors, supra, 3 Cal.4th at p. 913.)
The right to vote is a fundamental right. (Board of Supervisors, supra, 3 Cal.4th at
p. 913.) But not every law that “touches on the right to vote” requires strict scrutiny.
(Board of Supervisors, at p. 914; accord, People v. Boulerice (1992) 5 Cal.App.4th 463,
473; see also California Gillnetters Assn. v. Department of Fish & Game (1995) 39
Cal.App.4th 1145, 1161 [even statutes which severely restrict the pursuit of an
occupation are tested under the rational basis test].) The question presented here is
whether section 58999 impinges on the right to vote in a manner that requires the
application of strict scrutiny.
Appellants contend section 58999 should be subjected to strict scrutiny because it
offends the “one person, one vote” principle articulated in Reynolds v. Sims (1964) 377
U.S. 533 [12 L.Ed.2d 506], under which each person’s vote must be approximately equal
in weight to that of any other person in a representative election. (Id. at pp. 568, 579;
accord, Gray v. Sanders (1963) 372 U.S. 368, 379 [9 L.Ed.2d 821, 829-830] [“Once the
geographical unit for which a representative is to be chosen is designated, all who
participate in the election are to have an equal vote”].) Appellants contend section 58999
is inconsistent with the “one person, one vote” principle because it essentially allows
cooperative marketing associations to stuff the ballot box, thereby “diluting” the votes of
independent producers and “disenfranchising” the dissenting members of the cooperative
associations.
27
However, as appellants acknowledge, there is a recognized exception to the “one
person, one vote” requirement when the election relates to a governmental body
performing a specialized governmental function that has a disproportionate effect on a
definable segment of the community. (Bolen, supra, 1 Cal.4th at p. 665.) When these
conditions are met, “the strict demands of Reynolds [v. Sims], supra, 377 U.S. 533, do not
apply and voting power ‘may be apportioned in ways which give greater influence to the
citizens most affected by the organization’s functions’ [citation] without violating the
guarantee of equal protection . . . .” (Bolen, supra, at p. 665.)
The United States Supreme Court applied this exception in two leading cases:
Salyer Land Co. v. Tulare Lake Basin Water Storage Dist. (1973) 410 U.S. 719 [35
L.Ed.2d 659] (Salyer) and Ball v. James (1981) 451 U.S. 355 [68 L.Ed.2d 150] (Ball).
Salyer involved a challenge to the election of the board of directors of a small California
water storage district. (Salyer, supra, 410 U.S. at pp. 721, 724-725.) The statutory
scheme at issue in Salyer limited voting to owners of land within the district, and
apportioned voting power according to the assessed value of each owner’s land. (Id. at
pp. 724-725.) The voting scheme was challenged on equal protection grounds by, among
others, residents of the district who were not allowed to vote because they did not own
land within the district. (Id. at p. 724.) In upholding the property-based voting scheme,
the court concluded that the “one person, one vote” requirement did not apply because
the district’s purposes were specialized and narrow and its activities disproportionately
affected the voters responsible for paying its costs. (Id. at pp. 727-730.)
Ball, supra, 451 U.S. 355 similarly involved a challenge to the procedures used to
elect a water storage district board. (Id. at p. 357.) Similar to Salyer, the statute limited
voting to those owning land within the district, with voting power weighted in proportion
to acreage owned. (Ball, at p. 357.) Although the district at issue in Ball was
significantly larger and performed more functions than the district in Salyer, including
selling power to almost half the state’s population, the court again concluded that the
28
district fell within the exception to the one person, one vote principle. (Ball, at pp. 365-
366, 371.) The court reasoned that, despite its more diverse activities, the district’s
functions were still limited, and it did not exercise the sort of general government powers
that triggers the “one person, one vote” requirement, such as imposing taxes, maintaining
streets, operating schools, or providing health or welfare services. (Id. at p. 366.)
Further, coordinate with its specialized purpose and functions, the district’s activities fell
disproportionately on the specific class of persons who were allowed to vote in the
district elections. (Id. at pp. 370-371.)
Our Supreme Court applied the same two-pronged test in Bolen, supra, 1 Cal.4th
654. Bolen involved a validation proceeding filed by a transit district to validate special
benefit assessment districts created to help defray the costs of a mass transit system
through assessments on owners of commercial property. (Id. at pp. 659-660, 662-663,
673.) Although the transit district could establish the assessment districts without voter
approval, its actions were subject to referendum if requested by the owners of at least 25
percent of the assessed value of real property within the district. (Id. at p. 660.) By
statute, voting at such a referendum was limited to the owners of the real property who
were subject to the assessments, and the voting power was apportioned based on the
assessed value of the property. (Ibid.) Interveners in the validation proceeding
challenged the validity of the assessment districts, contending the statute’s property-
based voting scheme violated the equal protection clause. (Id. at p. 663.)
In lockstep with the reasoning in Salyer and Ball, the court in Bolen concluded
that the challenged voting scheme fell within an exception to the “one person, one vote”
requirement because (1) the benefit districts were special-purpose government units
lacking “ ‘general governmental powers,’ ” and (2) the class of eligible voters were
29
disproportionately affected by the election issue in that they were responsible for paying
the assessments.20 (Bolen, supra, 1 Cal.4th at pp. 665-666, 669-675.)
Applying these authorities, we agree with the trial court that the CMA’s voting
scheme does not require application of strict scrutiny. Voting in referendums on
marketing orders does not involve the election of officials who will exercise general
governmental powers, like voting in an election for national, state, or local
representatives. (Cecelia Parking Corp. v. United States Dept. of
Agriculture/Agricultural Mktg. Serv. (9th Cir. 1993) 10 F.3d 616, 624 (Cecelia
Packing).) Rather, it involves the establishment of an advisory board, which has limited
authority and performs specialized administrative functions generally related to the
marketing, processing, distributing, or handling of agricultural commodities. (§§ 58712,
58841, 58846, 58881.) And the functions of the Board at issue in this case are even more
limited, relating only to the research and promotion of raisins. (§§ 58889, 58892.) Under
the circumstances, we conclude that the raisin Board is the sort of “special-purpose”
governmental unit that is not subject to the strict requirements of Reynolds v. Sims, supra,377 U.S. 533.21
We draw additional support for our conclusion from the Ninth Circuit’s decision
in Cecelia Packing, which rejected an equal protection challenge to the cooperative bloc-
voting provisions under the federal AMAA. (Cecelia Packing, supra, 10 F.3d at pp. 617-
618.) The court concluded that because the federal marketing order involves “ ‘relatively
20 As to the latter finding, the court noted that the “issue-specific nature of referenda
in general and of the assessment district elections in particular reduces somewhat the
prominence equal protection values would assume if representational interests were at
stake in the challenged election.” (Bolen, supra, 1 Cal.4th at p. 671.)
21 As Bolen makes clear, the fact that a marketing order authorizes assessments does
not demand a different result. (Bolen, supra, 1 Cal.4th at pp. 660-661, 669-670; accord,
Ball, supra, 451 U.S. at p. 366, fn. 11.)
30
limited authority,’ ” and is “not ‘what might be thought as “normal governmental”
authority,’ ” the legislation should be reviewed under the rational relationship test. (Id. at
pp. 624-625.) We reach the same conclusion here.
Turning to the second prong of the Bolen test, which looks to the impact of the
election outcome on voters and nonvoters, we find that there are genuine differences in
the interests of those enfranchised and those disenfranchised under the legislation.22 The
persons “primarily affected” by the Marketing Order and its mandatory assessments—
raisin producers—are enfranchised by the voting scheme. Those excluded from voting
by the statutory scheme, such as raisin handlers and other commodity producers, are
substantially less affected.23
Appellants complain that the bloc-voting provisions of section 58999 triggers
strict scrutiny because it gives cooperative marketing associations disproportional voting
power. However, when the strict demands of the “one person, one vote” principle do not
22 As the Department notes, appellants failed to discuss the second prong of the
Bolen test in their opening brief. However, because the Department fully addressed the
issue in a supplemental brief, we will not treat this issue as forfeited. In contrast, we
conclude that appellants forfeited their arguments that (1) the statutory bloc-voting
provision violates appellants’ free association rights, and (2) requiring members to opt
out of bloc voting is unconstitutional. (See Reichardt v. Hoffman (1997) 52 Cal.App.4th
754, 764-765 and Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 52.)
23 We reject appellants’ suggestion that the bloc-voting provisions “disenfranchise”
members of cooperative marketing associations. Appellants are conflating the impact of
a member’s decision to join a cooperative marketing association with the impact of the
statutory voting scheme. The second prong of the Bolen test focuses solely on the
“contested statutory voting classification,” and the extent to which there is a “ ‘genuine
difference in the relevant interests’ of those enfranchised and those excluded” by that
statutory classification. (Bolen, supra, 1 Cal.4th at pp. 666, 670.) The class of eligible
voters under the statutory voting scheme are the producers directly affected by the
proposed marketing order. (§ 58993.) Bloc voting has not deprived cooperative
members of their right to vote; they simply have authorized the cooperative to vote on
their behalf.
31
apply, the apportionment of voting power among the enfranchised is subject to rational
basis review. (Bolen, supra, 1 Cal.4th at p. 677; Salyer, supra, 410 U.S. at pp. 733-734;
Ball, supra, 451 U.S. at p. 371.) Voting power may be apportioned in ways that give
greater influence to some voters as long as the apportionment of power is not “ ‘wholly
irrelevant’ ” to the objectives of the statute. (Bolen, supra, at p. 678.)
Under the rational relationship test, we conclude that section 58999’s bloc-voting
provisions are rationally related to the legitimate governmental purposes of encouraging
producers to join cooperative marketing associations, promoting orderly and efficient
marketing of commodities, and preventing or reducing economic waste. (§§ 58652,
58654; see also Corp. Code, §§ 14550, 14551.) As the Ninth Circuit summarized in
Cecelia Packing, supra, 10 F.3d 616: By allowing the cooperative marketing
associations to bloc vote, the government furthers its goal of encouraging producers to
“ ‘join together . . . to increase their collective economic strength and advantage,’ ”
thereby contributing to more stable and efficient markets. (Id. at p. 625, fn. 8.)
For these reasons, we reject appellants’ constitutional challenge to the bloc-voting
provisions of section 58999.
V
Post Hoc Rationalization
Appellants also contend the trial court erred in allowing the Department to
abandon its original rationale for the Marketing Order. Appellants contend that the
Department found that restoring and maintaining “producer purchaser power” was the
“cornerstone” justification for the Marketing Order. Because the trial court previously
found “no evidence” that producer purchasing power was inadequate, appellants contend
32
the trial court was required to remand this matter to the Department for new findings.24
We disagree.
As we explained in Ross, the trial court erroneously interpreted section 58813,
subdivision (b) to mean that the Department cannot adopt a marketing order for industry
advertising or research unless the order is necessary to address adverse economic
conditions so severe as to threaten the continued viability of the industry. (Ross, supra,
240 Cal.App.4th at p. 1264.) As a consequence, the trial court erroneously concluded the
Department must show both that the purchasing power of raisin producers was so “low”
as to threaten the economic viability of the industry, and that the Marketing Order was
necessary to “restore” their purchasing power. Applying this narrow standard, the trial
court found insufficient evidence of the existence of a crisis and of the necessity for the
Marketing Order to meet that crisis.
In Ross, we rejected the trial court’s interpretation as too narrow. (Ross, supra,
240 Cal.App.4th at pp. 1264-1265.) We held in Ross that if the marketing order does not
restrict commodity supply, the Department is not required to find the order is
“ ‘necessary’ ” to effect a reasonable correlation of supply and demand, or to find that the
order would “reestablish or maintain a defined level of producer purchasing power.” (Id.
at p. 1265.) Nor is the Department required to find that a proposed marketing order will
effectuate every purpose and policy of the CMA. (Ross, at p. 1264, fn. 7.) Instead, the
Department merely has to make “generalized findings” that the proposed marketing order
will “ ‘tend to effectuate the declared purposes and policies’ ” of the CMA. (Ross, at pp.
24 To the extent appellants argue the trial court failed to comply with our directions
in Ross, supra, 240 Cal.App.4th 1254, or that there is insufficient “economic evidence” in
the record to support the Marketing Order under any standard, we deem the arguments
insufficiently developed to merit review.
33
1265-1266.) Ross disposes of appellants’ argument that the Marketing Order is invalid
because there is insufficient evidence that the producers’ purchasing power was too low.
We likewise reject appellants’ argument that the Department improperly
“abandoned” its original rationale for the Marketing Order. Although the Department
described producer purchasing power as a “cornerstone” of the Order, the “main
objective” of the Order always was “to improve the demand for [raisins].” The
Department found that the Marketing Order, by increasing demand for raisins, would
increase returns for raisin producers, and thereby improve producer purchasing power.
For this reason and others, the Department found that the Marketing Order would “tend
to effectuate the declared purposes and policies of the [CMA],” which is the same finding
the Department sought to defend on remand. We find no merit to appellants’ contention
that the Department abandoned its original justification for the Order and instead sought
to uphold it based on the post hoc rationalizations of counsel.
VI
Alternatives to Marketing Order
The trial court rejected appellants’ contention that the Marketing Order was
invalid because the Department failed to consider reasonable alternatives before adopting
it. On appeal, appellants argue the trial court’s “conclusion is a clear misstatement of
both statutory text and case law.” Appellants contend that the plain language of section
58813 and governing case law required the Department to consider any reasonable
alternatives to the Marketing Order and to state the basis on which they were rejected.
Appellants contend that the Department failed to comply with this requirement even
though several reasonable alternatives were proposed.
Appellants’ claim lacks merit. Section 58813 does not require the Department to
consider alternatives, or even mention alternatives. It provides, in relevant part: “If the
marketing order or amendments to it contain provisions only for . . . advertising or sales
promotion, or for research, the director may issue such marketing order or amendments to
34
it if [he or she finds]: [¶] (a) That such marketing order or amendments to it are
reasonably calculated to attain the objectives which are sought in such marketing order[;]
[¶] (b) That such marketing order or amendments to it are in conformity with the
provisions of this chapter and within the applicable limitations and restrictions which are
set forth in this chapter and will tend to effectuate the declared purposes and policies of
this chapter[;] [and] [¶] (c) That the interests of consumers of such commodity are
protected in that the powers of this chapter are being exercised only to the extent which is
necessary to attain such objectives.” (§ 58813.)
Highlighting the term “amendments,” appellants argue that section 58813 requires
the Department to consider and make findings about any amendment offered as an
alternative to the proposed marketing order. We disagree. As the Department argues,
“[s]ection 58813’s references to amendments simply reflects that the Department is
required to follow the same procedures when [amending] a marketing order as when it
proposes a new marketing order.” (Citing § 59021.) Nothing in section 58813 requires
the Department to analyze reasonable alternatives to a marketing order and describe the
Department’s reasons for rejecting them before promulgating the Marketing Order.25
(Cf. Gov. Code, § 11346.2, subd. (b)(4)(A).)
The cases cited by appellants are similarly unavailing. Two of the cases, Western
States Petroleum Assn. v. Board of Equalization (2013) 57 Cal.4th 401, and Sims v.
Department of Corrections & Rehabilitation (2013) 216 Cal.App.4th 1059, involved
regulations issued under the Administrative Procedure Act (Gov. Code, § 11346 et seq.),
which, unlike the CMA, requires agencies to include a description of reasonable
alternatives to the proposed regulation and the agency’s reasons for rejecting them.
25 Moreover, even if the Department was required to consider amendments to the
Marketing Order and explain its reasons for rejecting them, the record shows that it did
so.
35
(Gov. Code, § 11346.2, subd. (b)(4)(A).) But marketing orders are expressly exempt
from the requirements of the Administrative Procedure Act. (Voss, supra, 46
Cal.App.4th at pp. 904, 911.) Thus, the cases cited by appellants have no application
here.
The other case cited by appellants, California Hotel & Motel Assn. v. Industrial
Welfare Com. (1979) 25 Cal.3d 200, involved wage and hour orders issued under the
Labor Code, which requires “a statement as to the basis upon which an adopted or
amended order is predicated.” (Lab. Code, § 1177.) In defining a “statement of basis” to
support a wage and hour order, our Supreme Court explained that a statement must
describe “how and why the commission did what it did.” (California Hotel, supra, at p.
213.) Where a wage and hour order turns on factual issues, the statement must
demonstrate support in the record, and where the order turns on policy choices, the
statement must discuss the risks, alternatives, economic and social consequences, where
appropriate, and show how the commission resolved the conflicts in adopting the orders.
(Id. at p. 214.) The CMA imposes no similar requirement here. (Voss, supra, 46
Cal.App.4th at p. 917 [the CMA does not “compel [the Department] to disclose the
reasoning underlying [its] findings . . . or to explain why the particular order was selected
over some other suggested version, if any”]; § 58813.)
The action of the Department in issuing a marketing order under the CMA is
quasi-legislative in nature. (Brock v. Superior Court, supra, 109 Cal.App.2d at p. 597.)
Courts exercise limited review of such acts out of deference to the separation of powers
between the Legislature and the judiciary and to the presumed expertise of the agency
within the scope of its authority. (Western Oil & Gas Assn. v. Air Resources Board
(1984) 37 Cal.3d 502, 509.) Under the CMA, the Department was not required to
consider reasonable alternatives to the Marketing Order and make findings as to why they
36
were rejected. Accordingly, the trial court properly rejected appellants’ argument that the
Marketing Order was invalid due to the Department’s failure to consider alternatives.26
VII
Free Speech and Free Association
In their complaint, appellants alleged that the Marketing Order violated their free
speech and free association rights by compelling them to associate with the Board and
subsidize the Board’s commodity advertising activities. Relying on the United States
Supreme Court’s decision in Johanns, supra, 544 U.S. 550, and this court’s decision in
Gallo Cattle, supra, 159 Cal.App.4th 948, the trial court rejected appellants’ free
speech/association claims, concluding that the Board’s commodity advertising is
government speech, and therefore appellants could be compelled to subsidize the speech
without violating the First Amendment.
After the trial court’s ruling, our Supreme Court decided Delano Farms Co. v.
California Table Grape Com. (2018) 4 Cal.5th 1204 (Delano Farms), which followed
Johanns in concluding that mandatory assessments by the California Table Grape
Commission to fund generic advertising of table grapes did not violate the free speech
rights of growers and shippers because the Commission’s promotional messages qualified
as government speech. (Id. at pp. 1209-1211, 1236-1244.) Appellants concede that
Delano Farms controls resolution of their claims, but they nevertheless raise the
argument to “preserve their rights . . . in the event that the U.S. Supreme Court reverses
the [Delano Farms] opinion.”
In November 2018, shortly after appellants filed their opening brief, the United
States Supreme Court denied review of Delano Farms. (Delano Farms Co. v. Cal. Table
26 This claim also is properly denied on procedural grounds since it was not alleged
in appellants’ complaint. (Centex Homes v. Superior Court (2013) 214 Cal.App.4th
1090, 1102.)
37
Grape Com. (2018) ___U.S.___ [202 L.Ed.2d 403].) Thus, the California Supreme
Court’s decision in Delano Farms is final and binding. (Auto Equity Sales, Inc. v.
Superior Court (1962) 57 Cal.2d 450, 455.)
We accept appellants’ concession that Delano Farms is controlling and dispositive
of their free speech/association claims. Although there are differences between the
marketing program at issue in Delano Farms and the program at issue here, we are
persuaded that the similarities considerably outweigh the differences. As in Delano
Farms, the Board was created by the Legislature to implement public policy by aiding the
producers of an agricultural commodity. (§§ 58651-58654, 58852.) As in Delano
Farms, the Legislature authorized the Board to promote the sale of the commodity
through generic advertising funded by compelled assessments on the producers.
(§§ 58889, 58921, 58925, 58926, 58929.) Further, as in Delano Farms, the Legislature
has specified, in general terms, the basic message for such promotional campaigns, while
leaving the details to be fleshed out by the Board, subject to Department oversight.
(§§ 58652, 58813.) Finally, as in Delano Farms, the Legislature has ensured that the
Department retains sufficient responsibility and control over the content of the Board’s
messaging for it to qualify as government speech, even if the Department staff did not
review “every word” of the promotional materials. (§§ 58711, 58841, 58846, 58923,
59081, 59082, 59201, 59240; Delano Farms, supra, 4 Cal.5th at p. 1242.) Accordingly,
we follow Delano Farms in concluding that the Board’s advertising program is
government speech and therefore did not violate appellants’ free speech or free
association rights. (Delano Farms, supra, 4 Cal.5th at pp. 1211, 1236-1244; see also
Gallo Cattle, supra, 159 Cal.App.4th at p. 952; Delano Farms Co. v. Cal. Table Grape
Com. (9th Cir. 2009) 586 F.3d 1219, 1220.)
DISPOSITION
We modify the judgment in the Lion case (C086205) to dismiss the Lion
appellants’ “varietal benefit” and “non-disparagement” claims due to their failure to
38
exhaust administrative remedies. As modified, we affirm the judgment. The appeal in
the Raisin Valley case (C086206) is dismissed. The Department shall recover its costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
KRAUSE , J.
We concur:
BLEASE , Acting P. J.
HULL , J.
39