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Burnette Foods, Inc. v. U.S. Department of Agriculture

United States District Court, W.D. Michigan, Southern Division

January 24, 2018

BURNETTE FOODS, INC., Plaintiff,
v.
U.S. DEPARTMENT OF AGRICULTURE and SONNY PERDUE, Secretary of Agriculture Defendants.

          OPINION GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' CROSS-MOTION FOR SUMMARY JUDGMENT

          GORDON J. QUIST UNITED STATES DISTRICT JUDGE

         Each party has moved for summary judgment. Count III of Burnette's Complaint alleges that the composition of the Cherry Industry Administrative Board (CIAB) violates the Tart Cherry Order. Count III is Burnette's sole remaining count. (ECF No. 23.)

         The issue of whether the CIAB violates the Tart Cherry Order turns on whether CherrCo, Inc. is a “sales constituency” under the Tart Cherry Order. A sales constituency is a “common marketing organization or brokerage firm or individual representing a group of handlers and growers. An organization which receives consignments of cherries and does not direct where the consigned cherries are sold is not a sales constituency.” 7 C.F.R. § 930.16 (emphasis added). In order to take into consideration various points of view in the tart cherry business, a single sales constituency cannot have more than one board member on the CIAB. 7 C.F.R. § 930.20(g). When Burnette filed its original petition in 2011, 14 of the 18 CIAB board members were CherrCo members; all nine of the representatives from Michigan on the CIAB were CherrCo members. (ECF No. 30-4 at PageID.2528.) A Judicial Officer found that CherrCo is not a sales constituency because it receives consignments of cherries from others and does not direct where the consigned cherries are sold. (ECF No. 30-3 at PageID.1411-34.) Both parties request summary judgment; Burnette asserts that the Judicial Officer's determination is not supported by substantial evidence. USDA asserts that the record supports the Judicial Officer's findings that CherrCo is a consignee of tart cherries which does not direct where cherries are sold.

         Upon consideration of the parties' briefs and the entire record, the Court will grant Burnette's motion to reverse the Judicial Officer's decision and deny USDA's cross-motion.

         I. Standard of Review

         “[R]eview of the [agency's] decision is limited to whether the decision is in accordance with law and whether the decision is supported by substantial evidence.” Defiance Milk Prods. Co. v. Lyng, 857 F.2d 1065, 1068 (6th Cir. 1988). “The [agency's] decision . . . must be upheld if the record contains ‘such relevant evidence as a reasonable mind might accept as adequate to support [the agency's] conclusion.'” Lehigh Valley Farmers v. Block, 829 F.2d 409, 412 (3d Cir. 1987) (first alteration added, second alteration in original) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 197, 217 (1938)); see also Defiance Milk Prods., 857 F.2d at 1068 (citing Lehigh Valley).

         II. Discussion

         Despite the deference owed to the Judicial Officer's decision, the Court finds that the Judicial Officer's decision is not supported by substantial evidence.

         The Judicial Officer, who affirmed an earlier decision by an administrative law judge on this issue, determined that CherrCo is not a sales constituency as defined in 7 C.F.R. § 930.16 because it receives consignments of cherries and does not direct where consigned tart cherries are sold. (ECF No. 1-3 at PageID.68.) The Judicial Officer made the following findings:

         • CherrCo's member-cooperatives select their own sales agents.

         • The sales agents agree to follow CherrCo's terms to ensure that all tart cherries sold by CherrCo's member-cooperatives meet CherrCo's minimum conditions for the sale.

         • When a sales agent makes a sale, the agent notifies CherrCo of the buyer's identity, the quantity of tart cherries purchased, the price, and other terms of the sale.

         • CherrCo authorizes the release of pooled cherries for sale if the sale meets CherrCo's minimum ...


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