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Delano Farms Co. v. California Table Grape Commission

California Court of Appeals, Fifth District

April 6, 2015

DELANO FARMS COMPANY et. al., Plaintiffs and Appellants,
v.
CALIFORNIA TABLE GRAPE COMMISSION, Defendant and Respondent. [And five other cases.[*]]

[REVIEW GRANTED BY CAL. SUPREME COURT]

APPEAL from a judgment of the Superior Court of Fresno County Nos. 636636-3 (Lead), 642546, 01CECG01127, 01CECG02292, 01CECG02289 & 11CECG00178. Donald S. Black, Judge.

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[Copyrighted Material Omitted]

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COUNSEL

Brian C. Leighton; Sagaser, Watkins & Wieland and Howard A. Sagaser for Plaintiffs and Appellants.

Baker, Manock & Jensen, Robert D. Wilkinson; Wilmer Cutler Pickering Hale and Dorr, Seth P. Waxman, Brian M. Boynton, Thomas G. Saunders and Francesco Valentini for Defendant and Respondent.

OPINION

LEVY, Acting P. J.

Appellants, Delano Farms Company, Four Star Fruit, Inc., Gerawan Farming, Inc., Bidart Bros. and Blanc Vineyards, LLC, challenge the constitutionality of the statutory scheme that establishes respondent, the California Table Grape Commission (Commission), and requires table grape growers and packers to fund the Commission’s promotional activities. Appellants assert that being compelled to fund the Commission’s generic advertising violates their rights to free speech, free association, due process, liberty and privacy under the California Constitution.

The trial court granted summary judgment in the Commission’s favor. The court held that the Commission is a “governmental entity” and thus its speech is government speech that can be funded with compelled assessments. Alternatively, the trial court applied the intermediate scrutiny test set forth in Gerawan Farming, Inc. v. Kawamura (2004) 33 Cal.4th 1, 22 [14 Cal.Rptr.3d 14, 90 P.3d 1179], and concluded that the compelled funding scheme did not violate the California Constitution.

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Appellants contend the trial court erred in granting summary judgment. According to appellants, facts relied on by the Commission to demonstrate that the funding scheme passed constitutional muster under intermediate scrutiny were not proved by admissible evidence and are in dispute. Appellants further argue the court erred in finding the speech was government speech because the Commission did not demonstrate either that the Commission is a government entity or that the government controlled the Commission’s activities and speech.

The Commission’s promotional activities constitute government speech. Accordingly, we will affirm the trial court’s grant of summary judgment on this ground.

BACKGROUND

1. The Table Grape Commission.

The Commission was created by legislation known as the Ketchum Act in 1967. (Food & Agr. Code, [1] § 65500 et seq.; United Farm Workers of America v. Agricultural Labor Relations Bd. (1995) 41 Cal.App.4th 303, 312 [48 Cal.Rptr.2d 696].) The Legislature explained that “[g]rapes produced in California for fresh human consumption comprise one of the major agricultural crops of California, and the production and marketing of such grapes affects the economy, welfare, standard of living and health of a large number of citizens residing in this state.” (§ 65500, subd. (a).) Noting that individual producers are unable to maintain or expand present markets or develop new markets resulting in “an unreasonable and unnecessary economic waste of the agricultural wealth of this state, ” the Ketchum Act declared it was the policy of the state to aid producers of California fresh grapes. (§ 65500, subd. (c); see id., subd. (g).) To carry out this policy, the Commission supports the fresh grape industry through advertising, marketing, education, research, and government relations efforts. (§ 65572, subds. (h), (i) & (k).) The Commission’s duties are set forth in the legislation.

The Commission’s work is funded primarily by assessments imposed on all shipments of California table grapes as required by the Ketchum Act. The Commission determines the amount of the assessment based on what is reasonably necessary to pay its obligations and to carry out the objects and purposes of the Ketchum Act, not to exceed a statutory amount per pound. (§ 65600.) These assessments are paid by shippers who are authorized to collect the assessments from the growers. (§§ 65604, 65605.)

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The Commission’s governing board is composed of 18 growers representing California’s six currently active table grape growing districts and one non-grower “public member.” (§§ 65550, 65575.1; see id., § 65553.)

California's Department of Food and Agriculture (CDFA) and the Secretary of the CDFA (Secretary) retain authority over the Commission’s activities through a few key functions. (Delano Farms Co. v. California Table Grape Comm’n (9th Cir. 2009) 586 F.3d 1219, 1221 (Delano Farms).) The CDFA oversees the nomination and selection of producers eligible to be appointed to the Commission board. (§§ 65559, 65559.5, 65560, 65562, 65563.) The Secretary not only appoints, but may also remove, every member of the Commission. (§§ 65550, 65575.1; Delano Farms, supra, 586 F.3d at p. 1221.) Further, the Secretary has the power to reverse any Commission action upon an appeal by a person aggrieved by such action. (§ 65650.5.) Additionally, the Commission’s books, records and accounts of all of its dealings are open to inspection and audit by the CDFA and the Department of Finance. (§ 65572, subd. (f).)

The CDFA provides information and instructions to the Commission regarding marketing orders each month through the CDFA’s “Marketing Memo.” The CDFA also retains the authority to review the Commission’s advertising. In its policy manual, the CDFA expressly “reserves the right to exercise exceptional review of advertising and promotion messages wherever it deems such review is warranted. This may include intervention in message development prior to placement of messages in a commercial medium or venue.” (Cal. Department of Food and Agriculture, Policies for Marketing Programs (4th ed. 2006) p. C-3.)

Moreover, as with other state government entities, the Commission is subject to the transparency, auditing and ethics regulations designed to promote public ...


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