This post should not be construed as legal advice
Today’s post deals with a technical issue that may only interest the law nerds reading this. Back in August, the D.C. Circuit Court of Appeals overturned a lower court ruling involving the pork checkoff program. The court of appeals decision turns on two issues, standing and exhausting administrative remedies. The court of appeals held in Humane Society of the U.S. v. Vilsack that the plaintiff, a pork producer, had standing to challenge the decision by the National Pork Board to purchase the slogan Pork: The Other White Meat from the National Pork Producers’ Council and the plaintiff was not required to exhaust administrative remedies before filing in court.
The National Pork Board is a quasi-governmental entity responsible for administering the “Pork Order” (also known as the Pork Checkoff Program). The goal of the Board is to promote pork in the market by developing, maintaining, and expanding markets for pork. At issue in the case is a 2006 decision by the Board to purchase the slogan Pork: The Other White Meat from the National Pork Producers’ Council (an industry trade group). The purchase was for $3 million a year for 20 years. In 2011, the Board changed the motto to Pork: Be Inspired but continued to pay the Council.
Because of this, the plaintiffs (a pork producer and the Humane Society) brought suit against the Secretary of Agriculture. The plaintiffs claimed that the agreement was not to buy a slogan for a marketing tool but was designed to keep the Council in business. The plaintiffs further claimed that the purchase violated Federal laws which prevented checkoff dollars from being used for lobbying purposes.
Lower Court Decision
The U.S. District Court for the District of Columbia held that the pork producer had not demonstrated an injury that was fairly traceable to the Board’s actions which could be redressed by a favorable decision by the court. Simply put, the pork producer and the animal rights’ group had failed to demonstrate standing (more on this in a minute).
Issues on Appeal
- Did the pork producer have standing to bring the claim?
- Was the pork producer required to exhaust administrative remedies before bringing the action in court?
I’ve written about standing earlier this year in discussing a case involving the American Farm Bureau Federation and the National Pork Producers’ Council (click here to read). American courts have had a long tradition of only hearing cases where the parties can demonstrate imminently to be harmed by a law. This means having legally protectable interest in the dispute, also known as “standing.” For example, you and your neighbor are having a property line dispute. You and your neighbor would have standing in any dispute involving the property line, but a property owner a mile away would not have standing in a property line dispute between you and your neighbor.
Standing requires a party meet three elements:
- An injury-in-fact;
- The causation relationship between the injury and the defendant’s action is being challenged; and
- The likelihood that the injury can be solved by a favorable decision and is not merely speculative.
The court of appeals found the pork producer met all three elements. The producer easily showed an injury-in-fact because evidence showed that the Board overpaid for the slogan (the Board’s own economist valued it at $375,000/year and not the $3 million paid). The pork producer’s injury was simple -- economic loss; because the board overpaid for the slogan it could not use those funds for promotions to increase demand for pork.
The court of appeals also thought the pork producer easily met elements 2 and 3. If the Board stopped making the annual payments to the Council, then the Board would have to spend that money on other promotions. Doing this would resolve the injury suffered by the pork producer.
Exhausting Administrative Remedies
The final issue before the court of appeals was whether the pork producer should be required to exhaust his administrative remedies before seeking a remedy in court. With the rise of administrative agencies, courts have traditionally not gotten involved in disputes until a party has exhausted all remedies before the agency.
Here the court of appeals found administrative relief to be doubtful and limited. Under the act of creating the Pork Checkoff program, a pork producer could only seek to have the program modified for the producer or to be exempted from the program. The court of appeals found this relief to be inadequate and would not resolve the pork producer’s claims in this case. Exempting or modifying the order for him would not resolve his issue (that the Board was misusing the Checkoff dollars). Because administrative relief would be inadequate, the producer was not required to exhaust his administrative remedies before going to court.
This decision will restart the process in the district court where the legal process will begin again. The case has implications because many commodities utilize some form of checkoff program. Future decisions from this case will help us determine limits that the quasi-governmental boards who manage the programs have in spending checkoff dollars.
The other issue this decision highlights is some of the unsexy procedural issues which can stop litigation. You may think you have the strongest case in the world, only to learn that your case is being barred because of a procedural issue. Working with a qualified and competent attorney can limit some of those issues, but not always.