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KREIDER DAIRY FARMS, INC. v. VENEMAN

June 15, 2004.

KREIDER DAIRY FARMS, INC., a Pennsylvania Family Farm Corporation, Plaintiff,
v.
ANN M. VENEMAN, Secretary of the United States Department of Agriculture, Defendant.



The opinion of the court was delivered by: JAMES KNOLL GARDNER, District Judge

OPINION

This matter is before the court on the parties' cross-motions for summary judgment. For the reasons expressed below, we conclude that defendant is entitled to judgment as a matter of law on plaintiff's claims. Therefore, we grant defendant's motion, deny plaintiff's motion, and dismiss plaintiff's Complaint.

  FACTUAL BACKGROUND

  The factual background of this civil action was described in detail by United States District Judge Edward N. Cahn in a related decision, Kreider Dairy Farms, Inc. v. Glickman, No. 95-CV-6648, 1996 U.S. Dist. LEXIS 12094, at *5-7 (E.D. Pa. August 14, 1996). The following facts are taken from Chief Judge Cahn's August 14, 1996 decision.

  Plaintiff Kreider Dairy Farms, Inc. ("Kreider") is a dairy farm corporation with its principal office in Manheim, Pennsylvania. Manheim is located within what the United States Department of Agriculture ("USDA") considers to be the Middle Atlantic area, a region in which sales of milk are regulated by Federal Milk Marketing Order 4 ("Order 4"). See 7 C.F.R. § 1004 (1995). Although Kreider is physically located within the boundaries of Order 4, it sells fluid milk in the marketing area covered by the New York-New Jersey Milk Marketing Order 2 ("Order 2").*fn1

  Since 1990, Kreider has been selling packaged kosher fluid milk to two subdealers or handlers: the Foundation for the Preservation and Perpetuation of the Torah Laws and Customs, Inc. ("FPPTLC") and Ahava Dairy Products, Inc. ("Ahava"). The FPPTLC is a distributor of fluid milk and milk products and is located in Baltimore, Maryland It sells fluid milk to customers in Lakewood, New Jersey. Ahava, which is also a distributor of fluid milk and milk products, is located in Brooklyn, New York. Ahava distributes its dairy products in Brooklyn, Manhattan, and Queens, New York.*fn2

  PROCEDURAL HISTORY

  This civil action is closely related to earlier litigation between plaintiff and defendant in Kreider Dairy Farms, Inc. v. Glickman, Nos. 95-CV-06648 and 98-CV-00518 ("Kreider I"). Kreider I and the instant action ("Kreider II") share the same factual background, and the procedural history of Kreider I is essential to an understanding of the issues before us on appeal in Kreider II. The procedural history of both actions follows, and is taken from, the August 14, 1996 opinion of Chief Judge Cahn in Kreider, 1996 U.S. Dist. LEXIS 12094, at * 5-7, and from the opinion of the United States Court of Appeals for the Third Circuit in Kreider Dairy Farms, Inc. v. Glickman, 190 F.3d 113, 116-117 (3d Cir. 1999), where indicated.

  Kreider I

  In December 1990 the Market Administrator ("MA") responsible for administering Order 2 learned that Kreider was selling fluid milk to Ahava for distribution into the milk marketing area covered by the New York-New Jersey Milk Marketing Order. Subsequently, the MA determined that Kreider also sold milk to the FPPTLC, which distributed it into the Order 2 marketing area.*fn3

  By letter dated December 19, 1990, the MA informed Kreider that it might be subject to regulation under Order 2 and instructed it to file reports with the MA's office. In January 1991 Kreider filed an application for a producer-handler designation with the MA for Order 2.*fn4 The MA denied the application based on its determination that Kreider did not meet the requirements of a producer-handler as defined in § 1002.12 of Order 2. See 7 C.F.R. § 1002.12 (1995).

  Instead, in July 1992, following audits of Kreider, the MA concluded that Kreider should be billed as a regulated handler operating a partial pool plant under Order 2. On August 7, 1992 the MA sent a billing statement to Kreider, billing it as a regulated handler under Order 2 for the period November 1991 to June 1992. Subsequently, the MA continued to bill Kreider on a monthly basis as a handler operating a partial pool plant.*fn5

  On December 28, 1993 Kreider filed a petition challenging the MA's determination that Kreider was a handler regulated by Order 2 and liable for payments to the producer-settlement fund, rather than a producer-handler exempt from such payments.*fn6 The Judicial Officer ("JO") dismissed Kreider's petition, affirming the MA's determination that Kreider was not eligible for producer-handler status because it sold milk to two subdealers, Ahava and FPPTLC.*fn7 The JO found that Kreider's reliance on Ahava and FPPTLC to distribute some of its fluid milk products evidenced its lack of complete and exclusive control over all facilities and resources used for the production, processing and distribution of milk, as required to qualify as a producer-handler under Order 2.*fn8

  On October 18, 1995 Kreider filed a complaint pursuant to the AMAA in the District Court challenging the JO's decision. See AMAA, 7 U.S.C. § 608c(15)(B) (1994). By opinion and Order dated August 14, 1996, the District Court denied the parties' cross motions for summary judgment and remanded for further administrative findings on whether Kreider was "riding the pool," that is, whether Kreider was the type of dairy for ...


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