The District Court of Montana recently ruled in favor of the USDA, the national Beef Checkoff, and all the state beef councils in the case brought by R-CALF and its legal partner, Public Justice.
The following gives some detail about what R-CALF USA (Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America) was trying to do, its arguments and how the court decided. The court issued a 27-page opinion and the following are only highlights.
This legal case is complicated in that those being attacked—the qualified state beef councils (QSBCs), the Federation of State Beef Councils and the Cattlemen’s Beef Board (CBB)—cannot directly defend themselves.
With R-CALF suing USDA, the defense is handled by the USDA’s legal department and the Department of Justice, and National Cattlemen’s Beef Association (NCBA) helped by funding the costs of several QSBCs and individual cattlemen intervened to strengthen the defense. USDA is the agency charged with making sure the checkoff operates as the Act and Order specifies. The Act and Order legislation was designed by cattlemen and cattlewomen, passed by Congress in 1985, and voted on by cattlemen in referendum.
Initially, R-CALF’s lawyers had settled on a strategy of pursuing the Montana Beef Council, a QSBC, but later added 14 other QSBCs to its suit. The strategy was to attack the checkoff at the state level, where checkoff funds are collected and initial decisions are made on how those funds are used, thereby destroying the whole structure.
The case was built around the contention that the checkoff violated the First Amendment of the Constitution by requiring all cattle operations to pay the checkoff, even if it paid for speech they disagreed with. The U.S. Supreme Court settled key points of this question over a decade ago, but R-CALF lawyers calculated that there were chinks that could be exploited, using legal precedent.
Key parts of the checkoff structure have always been the same. The boards of the QSBCs are selected or elected by cattlemen and cattlewomen, according to procedures specified in their state. The CBB members are nominated by cattlemen and cattlewomen in the states. The secretary of agriculture appoints the members of the CBB by selecting folks from the list submitted by cattlemen. The Agriculture Marketing Service (AMS) is the USDA agency that monitors CBB and QSBC activity to make sure programs stay within the Act and Order mandates and that monies are properly accounted for. AMS agency personnel attend all CBB meetings and review paperwork and program requests.
While this has been the general procedure since inception, R-CALF’s lawyers argued those procedures didn’t provide tight enough control over QSBCs to make their statements “government speech,” as the Supreme Court of the United States (SCOTUS) had ruled CBB promotions and ads were in 2005.
Part of R-CALF’s case was using case law to show that their purpose as an organization—“protecting domestic, independent cattle producers”—was being damaged by another organization’s activities [the checkoff] and that this was illegal.
In effect, R-CALF asserted that its budget was being damaged by having to sue the checkoff to stop speech it objected to. The court held that to have standing to pursue the case, R-CALF needed only to prove that it could do more lobbying if not deprived of the resources it “diverted” to “fight this alleged First Amendment violation,” i.e., the checkoff. R-CALF has also diverted resources to “educateproducers on the use of checkoff funds by QSBCs—the alleged problem central to this case,” thereby undercutting R-CALF’s purpose of protecting domestic, independent cattle producers.
After R-CALF’s initial lawsuit was filed in Montana, the concept of signing memorandums of understanding (MOUs) between USDA and the QSBCs was implemented to reinforce and clarify USDA’s authority over QSBCs. This meant that the process of USDA pre-reviewing all materials put out by the QSBCs was spelled out, leaving no doubt that no “government speech” would be put out to the public without making sure it was compliant with the Act and the Order. Both the District Court and the Ninth Circuit relied heavily on the existence of those MOUs in ultimately deciding the case.
The case was originally filed in District Court in Montana, had been appealed to the Ninth Circuit Court of Appeals, and then sent back to the district court for final resolution.
A key part of R-CALF’s argument had to do with what constitutes government speech. Because the Montana Beef Council and some other QSBCs are private organizations, R-CALF contended that they could not issue “government speech.”
The court held that the QSBC promotional and educational statements were still government speech, even if they were private entities, because the government, i.e., USDA, had preview oversight authority over the material. It is the principle of accountability that is the key, the court said, rather than exactly what kind of oversight or organizational structure.
That the QSBC is subject to decertification by the CBB, in concurrence with the USDA, is a key factor. The Supreme Court had held that potential control was an important element, and had not defined minimum requirements necessary for that control.
R-CALF had claimed that USDA did not have sufficient control over QSBCs if USDA did not appoint members to their boards. The courts held that being able to appoint members to state council boards was not a critical factor. The court also reiterated that SCOTUS had upheld the checkoff structure of the CBB when “the government possessed limited appointment power,” i.e., picking from a nominated list and “further limited” by being a geographically represented list.
The court did note that while R-CALF can’t legally do anything about checkoff ads or promotions it doesn’t like, it can lobby USDA about them.
The Montana Beef Council was severely crippled all this time because of the district court’s initial preliminary injunction. Besides all the time and money the CBB and QSBCs had to devote to backgrounding USDA attorneys, the efforts of NCBA and state cattlemen’s associations in supporting the legal response, the checkoff will have the added cost of reimbursing all of the government’s legal costs for fighting the R-CALF’s lawsuit.
All of this has cost the industry and the checkoff more money than they would have had to “divert” without R-CALF’s lawsuit.
The MOUs now spell out additional guidelines for USDA to use in evaluating all the materials put out by the QSBCs, above past levels, requiring “much analysis” in the words of the court. Since the checkoff reimburses USDA for every bit of expense it incurs in monitoring the checkoff, there will be substantial increased costs for the checkoff.
When ads or recipes come on television or radio, it’s doubtful any consumer debates whether or not that constitutes government or private speech. Yet R-CALF’s complaint alleged, in general, that because consumers viewed such ads as private speech, that meant it was no longer government speech and they should not have to pay for it through the checkoff. The court held that SCOTUS had already ruled in 2005 that R-CALF members “enjoy no right not to fund government speech…whether or not the reasonable viewer would identify the speech as the government’s.” — Steve Dittmer, WLJ correspondent
