Delano Farms Co. v. Cal. Table Grape Comm'n

235 Cal.App.4th 967

185 Cal.Rptr.3d 771

DELANO FARMS COMPANY et al., Plaintiffs and Appellants

v.CALIFORNIA TABLE GRAPE COMMISSION, Defendant and Respondent.

F067956

Court of Appeal, Fifth District, California.

Filed April 6, 2015

Brian C. Leighton, Clovis; Sagaser, Watkins & Wieland and Howard A. Sagaser, Fresno, for Plaintiffs and Appellants.

Baker, Manock & Jensen, Robert D. Wilkinson, Fresno; Wilmer Cutler Pickering Hale and Dorr, Seth P. Waxman, Brian M. Boynton, Thomas G. Saunders and Francesco Valentini for Defendant and Respondent.

OPINION

LEVY, Acting P.J.Appellants, Delano Farms Company, Four Star Fruit, Inc., Gerawan Farming, Inc., Bidart Bros. and Blanc Vineyards, LLC, challenge the constitutionality of the statutory scheme that establishes respondent, the California Table Grape Commission (Commission), and requires table grape growers and packers to fund the Commission's promotional activities. Appellants assert that being compelled to fund the Commission's generic advertising violates their rights to free speech, free association, due process, liberty and privacy under the California Constitution.

The trial court granted summary judgment in the Commission's favor. The court held that the Commission is a “governmental entity” and thus its speech is government speech that can be funded with compelled assessments. Alternatively, the trial court applied the intermediate scrutiny test set forth in Gerawan Farming, Inc. v. Kawamura (2004) 33 Cal.4th 1, 22, 14 Cal.Rptr.3d 14, 90 P.3d 1179, and concluded that the compelled funding scheme did not violate the California Constitution.

Appellants contend the trial court erred in granting summary judgment. According to appellants, facts relied on by the Commission to demonstrate that the funding scheme passed constitutional muster under intermediate scrutiny were not proved by admissible evidence and are in dispute. Appellants further argue the court erred in finding the speech was government speech because the Commission did not demonstrate either that the Commission is a government entity or that the government controlled the Commission's activities and speech.

The Commission's promotional activities constitute government speech. Accordingly, we will affirm the trial court's grant of summary judgment on this ground.

BACKGROUND

1. The Table Grape Commission.

The Commission was created by legislation known as the Ketchum Act in 1967. (Food & Agr.Code,¹ § 65500 et seq. ; United Farm Workers of America v. Agricultural Labor Relations Bd. (1995) 41 Cal.App.4th 303, 312, 48 Cal.Rptr.2d 696.) The Legislature explained that “[g]rapes produced in California for fresh human consumption comprise one of the major agricultural crops of California, and the production and marketing of such grapes affects the economy, welfare, standard of living and health of a large number of citizens residing in this state.” (§ 65500, subd. (a).) Noting that individual producers are unable to maintain or expand present markets or develop new markets resulting in “an unreasonable and unnecessary economic waste of the agricultural wealth of this state,” the Ketchum Act declared it was the policy of the state to aid producers of California fresh grapes. (§ 65500, subds. (c) & (g).) To carry out this policy, the Commission supports the fresh grape industry through advertising, marketing, education, research, and government relations efforts. (§ 65572, subds. (h), (i) & (k).) The Commission's duties are set forth in the legislation.

The Commission's work is funded primarily by assessments imposed on all shipments of California table grapes as required by the Ketchum Act. The Commission determines the amount of the assessment based on what is reasonably necessary to pay its obligations and to carry out the objects and purposes of the Ketchum Act, not to exceed a statutory amount per pound. (§ 65600.) These assessments are paid by shippers who are authorized to collect the assessments from the growers. (§§ 65604, 65605.)

The Commission's governing board is composed of 18 growers representing California's six currently active table grape growing districts and one non-grower “public member.” (§§ 65550, 65553, 65575.1.)

The California Department of Food and Agriculture (CDFA) and the Secretary of the CDFA (Secretary) retain authority over the Commission's activities through a few key functions. (Delano Farms Co. v. California Table Grape Comm'n (9th Cir.2009) 586 F.3d 1219, 1221 (Delano Farms ).) The CDFA oversees the nomination and selection of producers eligible to be appointed to the Commission board. (§§ 65559, 65559.5, 65560, 65562, 65563.) The Secretary not only appoints, but may also remove, every member of the Commission. (§§ 65550, 65575.1; Delano Farms, supra, 586 F.3d at p. 1221.) Further, the Secretary has the power to reverse any Commission action upon an appeal by a person aggrieved by such action. (§ 65650.5.) Additionally, the Commission's books, records and accounts of all of its dealings are open to inspection and audit by the CDFA and the California Department of Finance. (§ 65572, subd. (f).)

The CDFA provides information and instructions to the Commission regarding marketing orders each month through the CDFA's “Marketing Memo.” The CDFA also retains the authority to review the Commission's advertising. In its policy manual, the CDFA expressly “reserves the right to exercise exceptional review of advertising and promotion messages wherever it deems such review is warranted. This may include intervention in message development prior to placement of messages in a commercial medium or venue.” (Cal. Department of Food and Agriculture, Policies for Marketing Programs (4th ed.2006) p. C–3.)

Moreover, as with other state government entities, the Commission is subject to the transparency, auditing and ethics regulations designed to promote public accountability. (Delano Farms, supra, 586 F.3d at p. 1221.)

2. The underlying actions.

Appellants object to being required to pay assessments to fund the Commission's activities. They seek a judgment “declaring that the statutes establishing the Commission and defining its alleged authority, are unconstitutional in that they violate [appellants'] rights guaranteed under the Free Speech and Free Association Clauses of the California Constitution.” Appellants further allege that the law establishing the Commission exceeds the state's police power.

Appellants filed their original complaints between 1999 and 2001. These actions were stayed or dormant while the parties awaited decisions in a number of state and federal cases involving similar claims. The parties filed amended complaints in 2011 and the cases were consolidated.

The Commission moved for summary judgment. The Commission argued that appellants' free speech and association claims were barred because the Commission's speech activities constitute government speech. Alternatively, the Commission asserted appellants' free speech and association claims were barred because the Ketchum Act satisfies intermediate scrutiny. Finally, the Commission argued that appellants' police power claims failed under the rational basis standard of review.

The trial court granted summary judgment in the Commission's favor. The court concluded that the Commission is a government entity and thus the government speech defense was established. The court did not rule on the Commission's alternative claim that the Commission's speech is government speech because it is controlled by the CDFA. The court further found that the Ketchum Act survives both intermediate scrutiny and rational basis review.

DISCUSSION

1. Standard of review.

A party moving for summary judgment bears the burden of persuading the trial court that there is no triable issue of material fact and that it is entitled to judgment as a matter of law. (Brown v. Ransweiler (2009) 171 Cal.App.4th 516, 525, 89 Cal.Rptr.3d 801 (Brown ).) Once the moving party meets this initial burden, the burden shifts to the opposing party to establish, through competent and admissible evidence, that a triable issue of material fact still remains. If the moving party establishes the right to the entry of judgment as a matter of law, summary judgment will be granted. (Ibid. )

On appeal, the reviewing court must assume the role of the trial court and reassess the merits of the motion. (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1601, 50 Cal.Rptr.2d 431.) The appellate court applies the same legal standard as the trial court to determine whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law. The court must determine whether the moving party's showing satisfies its burden of proof and justifies a judgment in the moving party's favor. (Brown, supra, 171 Cal.App.4th at p. 526, 89 Cal.Rptr.3d 801.) In doing so, the appellate court must view the evidence and the reasonable inferences therefrom in the light most favorable to the party opposing the summary judgment motion. (Essex Ins. Co. v. Heck (2010) 186 Cal.App.4th 1513, 1522, 112 Cal.Rptr.3d 915.) If summary judgment is correct on any of the grounds asserted in the trial court, the appellate court must affirm, regardless of the trial court's stated reasons. (Garrett v. Howmedica Osteonics Corp. (2013) 214 Cal.App.4th 173, 181, 153 Cal.Rptr.3d 693.)

2. The constitutional validity of generic advertising assessments.

The United States Supreme Court provided the foundation for the law on the constitutional validity of compulsory fees used to fund speech in Abood v. Detroit Board of Education (1977) 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (Abood ) and Keller v. State Bar of California (1990) 496 U.S. 1, 110 S.Ct. 2228, 110 L.Ed.2d 1 (Keller ). In Abood and Keller, the court “invalidated the use of the compulsory fees to fund union and bar speech, respectively, on political matters not germane to the regulatory interests that justified compelled membership.” (Gallo...