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Fair Oaks Farm v. Kriegel

September 16, 2010

FAIR OAKS FARM, A FAMILY PARTNERSHIP, OWNED AND OPERATED BY MR. AND MRS. LEE WORTHINGTON; GAYLORD MILLARD, D/B/A MILLARD DAIRY, THE PENNSYLVANIA ASSOCIATION OF MILK DEALERS, PLAINTIFFS
v.
RICHARD KRIEGEL, CHAIRMAN OF THE PA MILK MARKETING BOARD; LUKE BRUBAKER, AND BARBARA GRUMBINE, MEMBERS OF THE PA MILK MARKETING BOARD; DEFENDANTS



The opinion of the court was delivered by: William W. Caldwell United States District Judge

MEMORANDUM

I. Introduction

The plaintiffs are Fair Oaks Farm, Gaylord Millard, d/b/a Millard Dairy, and the Pennsylvania Association of Milk Dealers (PAMD). The defendants are Richard Kriebel, Luke Brubaker and Barbara Grumbine, members of the Pennsylvania Milk Marketing Board (Board), sued in their official capacities only.

The plaintiffs filed this suit to challenge a Board order changing the way the over-order premium payable to Pennsylvania dairy farmers for their milk is calculated.

The plaintiffs argue the order violates the Commerce Clause by discriminating against milk from outside Pennsylvania.

The order is scheduled to take effect on October 1, 2010. We are considering the plaintiffs' motion for a preliminary injunction to enjoin the defendants from enforcing the order until a trial on the merits resolves the Commerce Clause issue. Neither party has requested a hearing, and we resolve the motion based on their evidentiary submissions.

II. Discussion

A. Standard for Granting a Preliminary Injunction

"A party seeking a preliminary injunction must satisfy the traditional four-factor test: (1) a likelihood of success on the merits; (2) he or she will suffer irreparable harm if the injunction is denied; (3) granting relief will not result in even greater harm to the nonmoving party; and (4) the public interest favors such relief." Miller v. Mitchell, 598 F.3d 139, 147 (3d Cir. 2010).

B. Likelihood of Success on the Merits

The Commerce Clause, U.S. Const., Art. I, § 8, cl. 3, authorizes Congress to regulate commerce among the several states, and implicitly restrains the power of a state to regulate interstate commerce. United Haulers Assoc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338, 127 S.Ct. 1786, 1792, 167 L.Ed.2d 655 (2007). The latter restraint is referred to as the "dormant" Commerce Clause.

To determine whether a law violates this so-called "dormant" aspect of the Commerce Clause, we first ask whether it discriminates on its face against interstate commerce. American Trucking Assns., Inc. v. Michigan Pub. Serv. Comm'n, 545 U.S. 429, 433, 125 S.Ct. 2419, 162 L.Ed.2d 407 (2005); Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources, 504 U.S. 353, 359, 112 S.Ct. 2019, 119 L.Ed.2d 139 (1992). In this context, "'discrimination' simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter." Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore., 511 U.S. 93, 99, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994); New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988). Discriminatory laws motivated by "simple economic protectionism" are subject to a "virtually per se rule of invalidity," Philadelphia v. New Jersey, 437 U.S. 617, 624, 98 S.Ct. 2531, 57 L.Ed.2d 475 (1978), which can only be overcome by a showing that the State has no other means to advance a legitimate local purpose, Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986).

Id. at 338-39, 127 S.Ct. at 1793. See also Oregon Waste Sys., Inc. v. Dep't of Env't Quality, 511 U.S. 93, 99, 114 S.Ct. 1345, 1350, 128 L.Ed.2d 13 (1994)("If a restriction on commerce is discriminatory, it is virtually per se invalid.").

Both federal and state law regulate milk pricing. We need not go into detail on the regulatory schemes. For our purposes, we need only note that Pennsylvania requires Pennsylvania milk dealers to pay an over-order premium to Pennsylvania milk producers for Class I milk.*fn1 The over-order premium is an amount added to the federal minimum price, or in those areas of Pennsylvania where there is no federal minimum price, the Pennsylvania minimum price. Some states, like Maryland and Ohio, where plaintiff producers, Fair Oak Farms and Millard Dairy, are located, respectively, have no state minimum price. The price to be paid producers in those states is set by the federal minimum, plus any "market premium" set by the law of supply and demand, known in the industry as a "voluntary premium." ...


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