Agricultural Law Weekly Review—April 28, 2016

Written by M. Sean High – Staff Attorney

The following information is an update of recent, local, state, national, and international legal developments relevant to agriculture:

Litigation: Court Rejects Contract Grower Claims against Pilgrim’s Pride

On April 22, 2016, the United States District Court, E.D. Texas, Marshall Division granted summary judgement and dismissed claims brought by more than 200 poultry growers alleging that Pilgrim’s Pride Corporation (PPC) violated the Packers and Stockyards Act (PSA) by closing two processing facilities (Sheila Adams, et al, v. Pilgrim’s Pride Corp., 2016 WL 1615700).  The court disagreed with the poultry growers’ assertion that PPC’s facility closures had violated PSA through an attempt to increase prices by keeping as much chicken off the market as possible.

GMO Ingredients: Court Permits Chipotle Advertisement Lawsuit to Move Forward

On April 20, 2016, the United States District Court Southern District of Florida ruled that a class action lawsuit, alleging that Chipotle Mexican Grill, Inc. (Chipotle) “misrepresented to customers that its food products contain only non-GMO products,” may proceed (Reilly v. Chipotle Mexican Grill, Inc., Case No. 15-Civ-23425-COOKE-TORRES).  Specifically, the court stated that the plaintiffs are permitted to proceed with their “allegation that Chipotle’s ‘Non-GMO’ claims ‘mislead consumers into paying a premium price…for inferior products or undesirable ingredients or for products that contain ingredients that are not disclosed.”

Equine Disease: PDA Quarantines Barn after Horse Tests Positive for Equine Infections Anemia

On April 20, 2016, the Pennsylvania Department of Agriculture (PDA) issued a press release announcing the quarantine “of an equine barn in Halifax, Dauphin County, after a horse at the barn tested positive for Equine Infectious Anemia (EIA) on Monday, April 18.”  According to PDA, both the barn and the horses will be quarantined for at least 60 days.  PDA further stated that EIA poses no health threat to humans and that “[t]he quarantine can be lifted after the remaining horses are determined not to be infected.”

Contract Review: USDA to Continue Payments for Pork Trademarks

On April 20, 2016, the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) announced that the agency “has completed its review of the 2006 asset purchase agreement between the National Pork Board and the National Pork Producers Council (NPPC) for the purchase of four trademarks…[which] include the word ‘pork’ in distinctive lettering set against a pork loin silhouette and ‘The Other White Meat’ in various forms.”  According to USDA, “[a]s a result [of the review], AMS is approving continuing annual payments of $3 million under the terms of the agreement.”

Department Structure: PDA Announces Reorganization

On April 23, 2016, the Pennsylvania Department of Agriculture (PDA) published notice in the Pennsylvania Bulletin that “[t]he Executive Board approved a reorganization of the Department of Agriculture effective April 4, 2016” (46 Pa.B. 20165).  Of note, “at the request of the Joint Committee on Documents under 1 Pa. Code § 3.1(a)(9) (relating to contents of Code)” PDA’s reorganization is published through the use of an organizational chart.   

Regulation: USDA Proposes Amendment to Voluntary Grading of Shell Eggs

On April 20, 2016, the United States Department of Agriculture Agricultural Marketing Service published notice in the Federal Register that the agency was “propos[ing] to amend the Regulations Governing the Voluntary Grading of Shell Eggs to clarify the definition of ‘condition’ and revise the prerequisite requirement for shell eggs eligible for voluntary USDA grading and certification” (81 FR 23188).  The comment period for the proposed rule closes June 20, 2016.

D.C. Court Reverses Prior Dismissal in National Pork Board Case

Written by Katharine Richter

On August 14, 2015, the United States Court of Appeals for the District of Columbia reversed a prior decision, which dismissed for lack of standing, a claim that alleged the National Pork Board misappropriated funds when it purchased rights to four trademarks from the National Pork Producers Council (NPPC).

According to the August 14 decision, “the National Pork Board is a quasi-governmental entity” whose purpose is “to promote pork in the marketplace,” and in exchange pork producers will “pay the Board a special assessment on each hog they import or sell.”  The decision states the special assessment fee is mandatory for pork producers.  According to the decision, the Board in 2006 purchased for $60 million from the NPPC, “four trademarks associated with the slogan Pork: The Other White Meat.”  The Board agreed to pay $3 million each year for 20 years and held the right to stop payment at any time with a year’s notice, but all rights to the trademark would then revert back to the NPPC.  In 2011, the Board replaced the slogan with Pork: Be Inspired, ending the agreement.

The plaintiffs bringing the suit are Harvey Dillenburg, a pork producer, the Humane Society, and Iowa Citizens for Community Improvement.  According to the decision, the plaintiffs argued that the Board overpaid for the trademarks and only made the deal “to keep the Council in business and support its lobbying efforts.”  The plaintiffs brought the suit against the Secretary of the Department of Agriculture and were asking to enjoin the Board from making further payments and “directing the Secretary to claw back what payments he can from the deal.”

The previous court decision had held that there was no “injury in fact fairly traceable to the actions of the defendant.”  The Appellate Court found that the appellant, Harvey Dillenburg, had presented enough factual evidence that there was actual economic loss and therefore had standing.