The opinion of the court was delivered by: ROYCE LAMBERTH, District Judge
This matter comes before the Court on defendant's motion to dismiss.
Defendant moves to dismiss this action pursuant to Fed.R.Civ.P.
12(b)(1) and Fed.R.Civ.P. 12(b)(6) on grounds that the Court lacks
subject matter jurisdiction, that plaintiffs have failed to exhaust
administrative remedies, and plaintiffs have failed to state a claim.
Upon consideration of defendant's motion, the opposition, the reply, the
applicable law, and the facts of this case, the Court finds that
defendant's motion to dismiss should be granted.
There are five plaintiffs in this action. Four of the plaintiffs are
cooperatives of dairy farmers that also act as "handlers." The remaining
plaintiff, Northwest Independent Producers Association ("NWI") is only a
"producer" and "does not own or operate any processing facilities."
Compl. ¶ 10. Plaintiffs bring this action to challenge a regulatory
action of the Secretary of Agriculture that alters the mechanism by which
price values for various classes of milk are determined under the
Agricultural Marketing Agreement Act of 1937 ("AMAA"), as
amended, 7 U.S.C. § 601, et seq. II. Analysis
The Court must determine two issues to resolve defendant's motion to
dismiss. First, whether the claims of the four handlers should be
dismissed for failure to exhaust administrative remedies? Second, whether
the claims of the producer should be dismissed for lack of subject matter
The administrative rights of handlers are set forth with precision in
the AMAA. Specifically, the AMAA, 7 U.S.C. § 608c(15)(A), requires
handlers to petition the Secretary, have a hearing, and receive a ruling
from the Secretary.*fn1 Once handlers complete these actions they may
then seek judicial review pursuant to the next subpart,
7 U.S.C. § 608c(15)(B).*fn2
Plaintiffs claim they have exhausted their administrative remedies.
Compl. ¶ 9. But plaintiffs do not allege that they requested an
administrative hearing or received a final ruling in accordance with
7 U.S.C. § 608c(15)(A). When confronted with this fact plaintiffs'
response is that administrative relief is "chimerical and fufile." Pls.'
Mem. In Opp'n to Def.'s Mot. To Dismiss at 12 ("Pls.' Opp'n"). The Court
finds plaintiffs' arguments of "futility" devoid of merit. The Supreme
Court squarely rejected such thinking in Block v. Community
Nutrition Institute, 467 U.S. 340 (1984). The Court stated that
"Congress unequivocally directed handlers first to complain to the
Secretary" and again stated that "we think it clear that Congress
intended judicial review of market orders issued under the Act ordinarily
be confined to suits brought by handlers in accordance with 7 U.S.C. § 608c(15)."
Id. at 348 (emphasis added). Community Nutrition
Institute involved a suit by consumers, but the Supreme Court's
rationale that "[a]llowing consumers to sue the Secretary would severely
disrupt this complex and delicate administrative scheme [and] would
provide handlers with a convenient device for evading the statutory
requirement that they first exhaust their administrative remedies"
applies equally here. Id. In this case, handlers attempt to
circumvent the plain statutory language by joining with a producer even
though they have not exhausted their administrative remedies. Plaintiffs
freely admit this is the case, stating: "[o]nce this Court concludes that
[NWI] has standing to sue, it has subject matter jurisdiction and
disputes over whether or not remaining plaintiffs have standing is
irrelevant." Pls.' Opp'n at 2. This attempt to bootstrap the claims of
handlers who have failed to exhaust to the claims of another party is
precisely at issue in Community Nutrition Institute and is
prohibited. The Court finds the handlers' failure to exhaust fatal and
because Congress precluded judicial review in these circumstances, the
handler plaintiffs' claims must be dismissed for lack of subject matter
jurisdiction. Fed.R.Civ.P. 12(b)(1).
The right of judicial review of the remaining plaintiff, a producer, is
also determined in large measure by the Supreme Court's holding in
Community Nutrition Institute. In addition to the statements
above, the Supreme Court observed that
Congress channelled [sic] disputes concerning
marketing orders to the Secretary in the first
instance because it believed that only he has the
expertise necessary to illuminate and resolve
questions about them. Had Congress intended to
allow consumers to attack provisions of marketing
orders, it surely would have required them to
pursue the administrative remedies provided in
§ 608c(15)(A) as well. The restriction of the
administrative remedy to handlers strongly
suggests that Congress intended a similar
restriction of judicial review of market orders.
467 U.S. at 347. This same rationale applies to producers as well. The
Supreme Court considered both the administrative process and subsequent
judicial review under the AMAA. It observed that consumers were not part of the administrative process, which
was reserved to handlers and producers. The Court stated that producers
are "entitled to participate in the adoption and retention of market
orders. 7 U.S.C. § 608c(8), (9), (16)B." Id. at 346. The
Court concluded that as to the administrative process "[i]n a complex
scheme of this type, the omission of such a provision is sufficient
reason to believe that Congress intended to foreclose consumer
participation in the regulatory process." Id. at 347 (citing
cases). The Court then evaluated consumer right to judicial review and
conducted the same analysis. It determined that preclusion "turns
ultimately on whether Congress intended for that class to be relied upon
to challenge agency disregard of the law," and since Congress only
provided the right of judicial review to handlers, the Court found no
basis for Congressional intent to allow consumers to bypass the
administrative remedies or to have a right to judicial review.
Id. at 347-348. Similarly, the inclusion of producers in the
administrative process but their exclusion from the provisions enabling
judicial review is the type of omissions that indicate a specific
Congressional intent to omit. This omission is attributed to
Congressional intent that handlers be "relied upon to challenge agency
disregard of the law." Id. at 347. Such an inference is logical
in light of the fact that the "`essential purpose [of this milk market
order scheme is] to raise producer prices.'" Id. at 342
(quoting S.Rep. No. 1011, 74th Cong., 1st Sess., 3 (1935)).
In the present case, this would be sufficient to determine that NWI
cannot seek judicial review. NWI is joined by four handlers, showing
a clear interest by those parties intended by Congress to challenge the
The Court also considers Stark v. Wickard, 321 U.S. 288
(1944). In Stark, producers were allowed to bring suit when the
Secretary made deductions from the producer settlement fund, acts the
producers claimed were "beyond the Secretary's statutory power," 321 U.S.
at 302. Since handlers could not question the use of the fund as they had
no financial interest in it, there was "no forum, other than ordinary courts, to hear this
complaint." Id. at 309. Thus "[j]udicial review of the
producer's complaint was therefore necessary to ensure achievement of the
Act's most fundamental objectives." Community Nutrition
Institute, 467 U.S. at 352.
Community Nutrition Institute evaluated the implications of
the Stark holding and determined that the presumption in favor
of judicial review found therein was overcome where "Congressional intent
to preclude judicial review is `fairly discernible in the statutory
scheme.'" 467 U.S. at 351 (quoting Data Processing Service
v. Camp, 397 U.S. 150, 159 (1970)). As applied in Community
Nutrition Institute the lack of alternative forum argument failed
because the Court concluded that "[h]andlers have interest similar to
those of consumers [and] [h]andlers can therefore be expected to
challenge unlawful agency action and to ensure the statute's objectives
will not be frustrated." 467 U.S. at 352. In this case, plaintiff NWI
cannot argue there is no alternative forum because handlers lack an
interest in the issue. In fact, plaintiffs cite cases for the proposition
that "the interest of dairy processors/manufacturers and their dairy
farmer patrons dovetail to a substantial degree. Pls.' Application for a
Prelim. Inj. and Mem. Of P & A. in Supp. of Pls.' Application for a
Prelim. Inj. at 57 (Mar. 18, 2003) (citing Jones v. Bergland,
456 F. Supp. 635, 650 (E.D. Pa. 1978)). Furthermore, the very presence of
handlers as plaintiffs in the suit leads inexorably to the conclusion
that a suit by a producer is not necessary to "ensure the statute's
objectives will not be frustrated."
The group of five plaintiffs in this suit is comprised of four handlers
and one producer. Defendants move to dismiss the four handlers on ground
that they have failed to exhaust the administrative remedies required as
a prerequisite to judicial review under 7 U.S.C. § 608c(15). Despite
plaintiffs' arguments that such administrative remedies are fufile the
Court finds that the handlers' failure to exhaust to their administrative remedies
deprives this Court of jurisdiction over their claim. Accordingly,
defendant's motion to dismiss is GRANTED as to plaintiffs Northwest Dairy
Association, Tillamook County Creamery, Farmers Cooperative Creamery, and
Agri-Mark, Inc. Defendant also moves this Court to dismiss plaintiff
Northwest Independent Producers Association, a producer, on the ground
that the Court lacks subject matter jurisdiction over the producer's
claim because the AMAA does not provide producers a right of judicial
review. The Court concludes that because handlers possess similar
interests to producers and are capable, upon exhaustion of administrative
remedies, of bringing suit pursuant to the AMAA, that defendant's motion
to dismiss plaintiff Northwest Independent Producers Association is also
GRANTED. Therefore, the claims of Northwest Independent Producers
Association, Northwest Dairy Association, Tillamook County Creamery,
Farmers Cooperative Creamery, and Agri-Mark, Inc. are dismissed for lack
of subject matter jurisdiction.
Signed by Royce C. Lamberth, United States District Judge, ...