SUPREME COURT:

Justices kick raisin farmer's takings claim back to appeals court

The Supreme Court unanimously ruled today that a California raisin farmer may challenge in federal court a Depression-era program that required him to turn over a percentage of his crop to the government every year.

In a narrow and brief opinion, the justices held that the 9th U.S. Circuit Court of Appeals has jurisdiction to hear farmer Marvin Horne's claim that the program, established by the 1937 Agricultural Marketing Agreement Act, or AMAA, amounted to an unconstitutional taking without compensation.

The complicated case hinged on whether Horne and his wife, who have farmed raisins in Madera and Fresno counties for nearly half a century, qualified as "handlers" or "producers" under the law.

Because the Department of Agriculture and its Raisin Marketing Order were not paying them market value for their raisins, the couple reorganized their business in 2000 to directly market raisins to food processors and bakeries. By doing so, the Hornes believed they had sidestepped the definition of "handler" and, consequently, the USDA program, which was designed to protect farmers from wild price swings.

The law defines handlers as processors, or associations of producers and others who engage in handling of raisins.

Horne stopped turning over raisins to USDA in 2002, when the government required 47 percent of the crop, and 2003, when it called for 30 percent. During those years, his business processed 3 million pounds of raisins.

In April 2004, however, USDA brought an enforcement action, eventually requiring Horne to pay for the raisins he should have provided to the government -- nearly $484,000 -- and assessed civil penalties of more than $200,000.

Horne challenged the fines in federal district court, arguing that he wasn't a handler and that the fines constituted a taking that violated the Constitution's Fifth Amendment, which states that private property may not be taken "without just compensation."

The San Francisco-based 9th Circuit ruled for USDA but did not address the takings claim because it said Horne brought the case as a "producer," not a "handler." The 1887 Tucker Act, the court ruled, required producers to seek relief at the U.S. Court of Federal Claims (Greenwire, March 19).

That determination was "not correct," wrote Justice Clarence Thomas on behalf of the high court.

Thomas wrote that even though the Hornes claimed to be producers, USDA and lower courts had determined that they were handlers.

"It is undisputed that the Marketing Order imposes duties on petitioners only in their capacity as handlers," Thomas wrote. "As a result, any defense raised against those duties is necessarily raised in that same capacity."

The ruling is seemingly in line with what both the Hornes and the government advocated for at arguments in March. The government shifted its position then and abandoned its argument that the 9th Circuit lacked jurisdiction (Greenwire, March 20).

The case had been closely watched by property rights advocates, who contend that the USDA program is another example of government overreach.

Rachel Brand of the U.S. Chamber of Commerce said the ruling is a boon for businesses.

"This case is about how many hoops individuals or businesses must jump through to stop the government from trampling their property rights," she said. "This boils down to the court preventing regulators from strong-arming businesses with the threat of endless litigation."

However, the court notably did not rule on the merits of the Hornes' takings claims. Instead, it remanded that question to the 9th Circuit for further proceedings.

Vermont Law School professor John Echeverria said the decision is tailored specifically to the circumstances presented in the case.

"It turns out to be a narrow, specialized ruling based on the conclusion that it involves a handler, not a producer," Echeverria said, adding that this was basically the Hornes' "fallback" position.

The ruling, he said, "doesn't support broader arguments for bringing takings claims against the United States outside of that."

Click here for the ruling.

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