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CLOVER FARMS DAIRY v. BRUMBAUGH

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA


April 20, 1984

CLOVER FARMS DAIRY, HARRISBURG DAIRIES, INC., RITCHEY'S DAIRY, BROOKWOOD FARMS, GREATER PITTSBURGH DAIRY INDUSTRY ASSOCIATION, CARL COLTERYAHN DAIRY, INC., MARBURGER FARM DAIRY, INC., SCHNEIDER'S DAIRY, TAYLOR MILK COMPANY, and TURNER DAIRY FARMS, INC., Plaintiffs
v.
GEORGE BRUMBAUGH, ROBERT DERRY and PAUL O'HOP, Officially and in their individual capacities, Defendants

The opinion of the court was delivered by: RAMBO

MEMORANDUM

 This court has before it a motion for a temporary restraining order to prevent the suspending of minimum price controls for low fat and skim milk. Notice of the motion was given to the named defendants and the Commonwealth of Pennsylvania.

 The Pennsylvania Milk Marketing Board is an independent commission of the Commonwealth of Pennsylvania charged by the Milk Marketing Law with regulation of the milk industry pursuant to the provisions of said Act, with responsibility and power to supervise, investigate and regulate the entire milk industry of the Commonwealth of Pennsylvania including the authority to issue orders fixing prices of milk including low fat and skim milk. The Board's authority derives from the Act of April 28, 1937, P.L. 417 as amended, 31 P.S. § 700j-801 (1983). The Act, in pertinent part, provides:

 

The Board shall ascertain, after a hearing in which all interested persons shall be given reasonable opportunity to be heard, the logical and reasonable milk marketing areas within the Commonwealth . . . and shall ascertain and maintain such prices for milk in the respective milk marketing areas as will be most beneficial to the public interest, best to protect the milk industry of the Commonwealth and insure a sufficient quantity of pure and wholesome milk to inhabitants of the Commonwealth . . .

 

. . . .

 

The Board may, on its own motion or upon application in writing from time alter, revise or amend an official order defining milk marketing areas or fixing prices to be charged or paid for milk. Before making, revising or amending any order defining milk marketing areas or fixing prices to be charged or paid for milk, the Board shall hold a hearing, after giving a reasonable opportunity to be heard to interested persons of whom the Board has notice . . ., and, in case of any order affecting the public after giving reasonable notice thereof to the public in such newspaper or news papers as, in the judgment of the Board shall, after sufficient notice and publicity . . .

 

. . . .

 

All provisions of all price fixing orders shall be presumed to be valid and the burden of proving any invalidity of any provisions thereof shall be upon the person asserting the same.

 31 P.S. § 700j-801 (1983)

 The Act of April 28, 1937, P.L. 417, as amended, 31 P.S. § 700j-802 (1983), in pertinent part, provides:

 

The fixing of minimum wholesale or retail prices for skim milk . . . shall be discretionary with the Board.

 31 P.S. § 700j-802.

 Findings of fact

 1. Pursuant to official action and subsequent to notice and hearing, the Board issued general orders which fixed the minimum prices to be paid licensed dealers for nonfat and skim milk within the various milk marketing areas of the Commonwealth.

 2. At its regularly scheduled public meeting held on April 16, 1984, the Board discussed and dismissed petitions filed with the Board by and on behalf of the City of Pittsburgh and Mayor Richard S. Caliguiri, Lawson Milk Company, and the City of Erie requesting, in the alternative, that the Board suspend resale prices for low fat and skim milk or fix a price hearing during the month of April, 1984 limited to those products of Milk Marketing Board Area No. 5. The City of Pittsburgh also requested that the Board unilaterally suspend all minimum prices for non-whole milk products within Milk Marketing Board Area No. 5.

 3. At the same public meeting on April 16, 1984, defendants, on their own motion and without notice or provision of an opportunity to be heard afforded to plaintiffs, "suspended" the provisions of general orders governing the prices to be paid dealers for low fat and skim milk, thus altering, revising or amending the official order fixing the prices to be paid for said categories of milk in five of the six milk marketing areas within the Commonwealth.

 Discussion

 In determining whether to grant a preliminary injunction, this court must weigh a number of factors. The major factors to be considered are: (1) a reasonable probability of eventual success in the litigation; (2) irreparable injury pendente lite if relief is not granted; when relevant (3) the possibility of harm to other interested persons from the grant or denial of the injunction; and (4) the public interest. Constructors Association of Western Pennsylvania v. Kreps, 573 F.2d 811, 815 (3d Cir. 1978).

 The plaintiffs' arguments on the merits are that they have a property right in the promulgated price fixing order and any change in the order must be accomplished with the requisite due process. See U.S. Const. amend. 5; U.S. Const. amend. 14. The United States Supreme Court has recognized that persons may have protectible property rights in entitlements which flow from a government to certain groups in our society. Goldberg v. Kelly, 397 U.S. 254, 262, n.8, 25 L. Ed. 2d 287, 90 S. Ct. 1011 (1970). The Pennsylvania minimum pricing program is like an indirect entitlement and would appear to be a property right. The defendants argue that the plaintiffs do not have a property right in the continued existence of minimum prices. In support of this proposition, the defendants rely on Lily Penn Food Stores, Inc. v. Commonwealth of Pennsylvania, No. 1399 C.D. 1982 at 2 (filed Apr. 9, 1984) (denying reargument); but see Brookwood Farms v. Milk Marketing Board, 8 Pa. Commw. Ct. 511, 304 A.2d 510, 515 (1973). This court agrees that the plaintiffs have no property right in having prices fixed; however, once the prices are fixed, the persons having the right must receive minimum procedural due process before the right can be taken away. Id. at 270-71. See Hewitt v. Helms, 459 U.S. 460, 103 S. Ct. 864, 74 L. Ed. 2d 675 (1983). The state statute sets forth a very basic and minimum due process procedure by calling for notice and an opportunity to be heard. 31 P.S. 700j-801. In this particular case, the right to notice and a hearing appears to be equivalent to what the fourteenth amendment requires. See 397 U.S. at 263-66. The plaintiffs would seem to have a reasonable probability of eventual success on the merits.

 The irreparable injury to the plaintiffs would appear to be that, once the pricing structure is removed, they would lose the property right which they have in the minimum price structure. This court can see no obvious way in which the price structure once removed can be reinstated without much dislocation in the dairy industry. The plaintiffs also have no parties from whom damages might be collected, even if damages could be calculated. *fn1" The loss of the property right would be irreparable.

  The potential injury to third parties, if the Temporary Restraining Order is granted, would not be sufficient to outweigh the potential injury to the plaintiffs. Whatever expenditures some dairy retailers may have made in preparation for the change in the pricing policy is minimal in comparison to the losses which may be suffered by the remainder of the dairy industry if the minimum prices are removed without due process. Compare Empire Kosher Poultry, Inc. v. Commonwealth of Pennsylvania, No. 84-0196 at 7-8 (M.D. Pa. Feb. 15, 1984) (the possible spread of avian flu could destroy multimillion dollar poultry industry).

 The last element to be considered by this court is the question of the public interest. The legislature of the Commonwealth stated its purpose in passing the Milk Control Law of 1937 as follows:

 

In the exercise of the police power of the Commonwealth, it is hereby declared that the production, transportation, manufacture, processing, storage, distribution, and sale of milk in the Commonwealth is a business affecting the public health and affected with a public interest, and it is hereby declared that this act shall be and is hereby enacted for the purpose of regulating and controlling the milk industry in this Commonwealth, for the protection of the public health and welfare and for the prevention of fraud.

 31 P.S. § 700j-101.

 This court sees no reason to conclude that the public interest would be served by allowing the notice and hearing provisions of the act to be circumvented. Any initial benefit resulting from lower prices might well be greatly outweighed by the longer term damage the public would suffer if the Commonwealth's regulation of the milk industry was undermined. The public interest is best served by maintaining the status quo until the notice and hearing provision have been complied with by the Board.

 Since this court has decided to grant the Temporary Restraining Order, the issue of whether a bond will have to be posted must be addressed. Fed.R.Civ.P. 65(c). No bond is required when the restrained party shows no likelihood of harm. Powelton Civic Home Owners Assoc. v. Department of Housing & Urban Development, 284 F. Supp. 809, 814-15, 840 (E.D. Pa. 1968). No bond will be required.

 [EDITOR'S NOTE: The following court-provided text does not appear at this cite in 586 F. Supp.]

 ORDER

 In accordance with the reasoning set forth in the accompanying memorandum, IT IS HEREBY ORDERED THAT:

 1. The captioned defendants, their servants, agents, employees, attorneys, and all other persons in concert or participation with them are hereby temporarily restrained from in any manner either directly or indirectly suspending, altering, amending or revising General Order Nos. A-846, A-844A, A-835, A-843, and A-845 governing prices for low fat and skim milk within Pennsylvania Milk Marketing Areas 2, 3, 4, 6 and 5, respectively, without requiring that plaintiffs first give security.

 2. This order shall expire ten (10) days from the date of its entry.


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