Wileman Bros. & Elliott v. Lyons

Filed 12/17/01
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for
publication or ordered published for purposes of rule 977.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
WILEMAN BROS. & ELLIOTT, INC.,
Plaintiff and Appellant,
v.
WILLIAM LYONS, JR., as Secretary, etc.,
Defendant and Respondent.
F032298
(Super. Ct. No. 94-166231)
OPINION
APPEAL from a judgment of the Superior Court of Tulare County. Patrick J.
O'Hara, Judge.
Thomas E. Campagne & Associates and Jeffrey C. Heeren for Plaintiff and
Appellant.
Bill Lockyer, Attorney General, Richard M. Frank and Charles W. Getz IV,
Assistant Attorneys General, Edna Walz, Ronald A. Reiter, Seth E. Mermin and Tracy
L. Winsor, Deputy Attorneys General, for Defendant and Respondent.
SEE DISSENTING OPINION OF LEVY, J.
Kahn, Soares & Conway, George H. Soares, Dale A. Stern and Robert S.
Hedrick for California Avocado Commission, California Apple Commission,
California Asparagus Commission, California Cut Flower Commission, California
Date Commission, California Egg Commission, California Forest Products

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Commission, California Grape Rootstock Improvement Commission, California
Kiwifruit Commission, Lake County Winegrape Growers Commission, Lodi-
Woodbridge Winegrape Growers Commission, California Pepper Commission,
California Pistachio Commission, California Rice Commission, California Sheep
Commission, California Strawberry Commission, California Tomato Commission,
California Walnut Commission, and California Wheat Commission as Amici Curiae
on behalf of Defendant and Respondent.
-ooOoo-
This is an appeal from a final judgment rejecting constitutional challenges by
appellant Wileman Bros. & Elliott, Inc., to a marketing order for California plums
implemented by respondent’s predecessor as Secretary of the Department of Food and
Agriculture (collectively, the Secretary) in 1994. In addition, appellant challenges an
order requiring it to pay to the Secretary $37,343.13 in collection fees and penalties for
late payment of marketing order assessments.
Facts and Procedural History
Various state and federal agencies impose assessments on producers and
handlers of foods to pay for generic advertising programs involving the particular
foods. These programs do not specifically target a particular brand of beef, milk,
plums, or other food; instead, they generally encourage the public to eat more of the
product. (See generally Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 476-
480.)
For over 12 years, appellant has been fighting against laws imposing
advertising assessments on plums produced in California. (See Glickman v. Wileman
Bros. & Elliott (1997) ___ U.S. ___, ___ [117 S.Ct. 2130, 2135].) Beginning in 1988,
appellant filed an administrative challenge to advertising assessments imposed under a

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federal plum marketing order. That challenge eventually was rejected by the United
States Supreme Court. (Id. at p. ___ [117 S.Ct. at p. 2142].)
The federal marketing order was terminated in 1991. The state marketing order
was implemented in the 1994 harvest season. Appellant filed this action challenging
the state order in June of 1994. The complaint raised issues under the state
Administrative Procedures Act (APA) (Gov. Code, § 58601 et seq.) and under the state
and federal Constitutions.
Appellant initially prevailed in the trial court on its APA claim. That judgment,
however, was reversed on appeal. (Voss v. Superior Court (1996) 46 Cal.App.4th
900.) After the United States Supreme Court issued its opinion in Glickman, the
Secretary filed a motion for judgment on the pleadings on appellant’s speech-related
constitutional claims. By order of April 16, 1998, the trial court granted judgment on
those claims, which were the first and second causes of action in appellant’s first
amended complaint. Subsequently, appellant filed a voluntary dismissal without
prejudice of its remaining causes of action. On April 8, 1999, judgment was entered
on all counts.
When the trial court granted judgment on APA grounds in 1994, it ordered
appellant, pending the Secretary’s appeal, to pay into a segregated, interest-bearing
trust account all then-due and future assessments against appellant under the plum
marketing order. The order provided: “Payments of future assessments shall be paid
as they are due. In the event that payments are not timely made, cost and penalty
amounts provided by Food and Agricultural Code section 58930 shall automatically be
added to the amount due.” This order subsequently was amended to permit appellant
to withhold in the trust account only those portions of the assessment attributable to
the generic advertising program.

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As part of the judgment on the pleadings entered in 1998, the court ordered
appellant’s attorney to “pay all monies in said [trust] account(s), including all amounts
and penalties charged due to untimely payment and all interest accrued in the trust
account(s),” to the Secretary’s collection agent. By check dated May 4, 1998,
appellant’s attorney paid to the Secretary’s agent $101,715.79, which purported to be
all remaining assessments, plus interest.
On October 14, 1998, the Secretary filed a “motion to enforce court orders with
regard to monies maintained in trust by counsel for plaintiff.” By minute order of
November 19, 1998, and by formal order filed February 25, 1999, the court found
appellant owed additional collection costs and penalties in the amount of $37,343.13.
The court ordered appellant to pay that sum to the Secretary’s collection agent.
Appellant filed a notice of appeal on December 3, 1998. The appeal purported
to be from the April 17, 1998, order granting partial judgment on the pleadings and
from the November 19, 1998, minute order for payment of collection costs and
penalties. Prior to the filing of the record on appeal, appellant filed a dismissal
without prejudice of its remaining causes of action, which asserted alternative
constitutional theories concerning the invalidity of certain aspects of the plum
marketing order and its enforcement. On April 8, 1999, the trial court entered a
judgment for the Secretary on the first and second causes of action and dismissing the
remaining causes of action without prejudice. We deem the premature notice of
appeal to constitute a timely notice of appeal from the judgment of April 8, 1999, and
from the interim order for payment of February 25, 1999. (Smith v. County of Kern
(1993) 20 Cal.App.4th 1826, 1829, fn. 2.)1
1 In response to this court’s inquiry, citing Hill v. City of Clovis (1998) 63
Cal.App.4th 434, appellant has informed the court that it waives its right to adjudicate

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Discussion
We have today filed an opinion for publication in Gerawan Farming, Inc. v.
Lyons (Dec. 17, 2001, F031142) ___ Cal.App.4th ___. That opinion, in which we
conclude the California Plum Marketing Program,2 in relevant part, violates the free
speech rights of dissenting plum growers under article I, section 2, subdivision (a) of
the California Constitution, resolves all of the issues presented by the present appeal.
For the reasons stated in our opinion in Gerawan Farming, Inc. v. Lyons, supra,
___ Cal.App.4th ___, we reverse the judgment in the present case. Further, we reverse
the order of November 19, 1998, which had ordered payment of collection costs and
penalties against appellant. In the present case, it appears the parties have stipulated to
the portion of the Plum Marketing Order assessments that are attributable to the non-
speech-related functions of the California Plum Marketing Board. As noted in our
procedural summary above, appellant paid all non-speech-related portions of the
assessment after this litigation began. The order of November 19, 1998, concerned
only those portions of appellant’s Plum Marketing Order assessments attributable to
the generic advertising program. Thus, it is our understanding that respondent does
not contend appellant still owes any assessments not attributable to advertising. If,
contrary to appearances based on the present record, respondent does contend
those causes of action previously dismissed without prejudice. Pursuant to Sullivan v.
Delta Air Lines, Inc. (1995) 15 Cal.4th 288, 308-309, we elect to give effect to this
waiver; we deem the original judgment dismisses those causes of action with
prejudice. Accordingly, we deem this a timely appeal from a final judgment.
2 The California Plum Marketing Program was established pursuant to the
California Marketing Act of 1937, as amended, Food and Agriculture Code section
58601 et seq.

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appellant still owes nonadvertising assessments, respondent may petition for
enforcement of those assessments in the trial court after remand.
Disposition
The judgment is reversed. The matter is remanded to the trial court for further
proceedings consistent with this opinion and the opinion in Gerawan Farming, Inc. v.
Lyons, supra, ___ Cal.App.4th ____. In particular, appellant is entitled to an
injunction prohibiting enforcement of assessments against objecting growers and
handlers to the extent those assessments are for speech-related purposes. The amount
of assessments allocable to speech functions shall be determined by the trial court.
Appellant is entitled to its costs on appeal.
______________________________
Vartabedian, Acting P. J.
I CONCUR:
________________________________
Harris, J.

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LEVY, J.
I respectfully dissent.
In Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 517, the California
Supreme Court instructed this court to address, in the first instance, various questions
engendered by the confluence of the right to freedom of speech under California
Constitution, article I, section 2, subdivision (a) (article I) and the California Plum
Marketing Program. The court phrased this legal quandary as follows:
“Our conclusion, however, brings no conclusion to this cause. That
the California Plum Marketing Program implicates Gerawan’s right to
freedom of speech under article I does not mean that it violates such right.
But it does indeed raise the question. That question, in turn, raises others,
including what test is appropriate for use in determining a violation. And
that question, in its turn, raises still others as well, including what
protection, precisely, does article I afford commercial speech, at what level,
of what kind, and, perhaps ‘most difficult,’ subject to what test.” (Gerawan
Farming, Inc. v. Lyons, supra, 24 Cal.4th at p. 517.)
In its opinion on remand in Gerawan Farming, Inc. v. Lyons (Dec. 17, 2001,
F031142) ___ Cal.App.4th ___, the majority concludes that the generic advertising
portion of the California Plum Marketing Program violates article I because its operation
does not demonstrate the exercise of a substantial government interest. Since this case
presents the same issue, the majority opinion reverses this judgment for the same reason.
However, I disagree with the majority’s conclusion. Therefore, I write separately
in an effort to respond to the Supreme Court’s directive to formulate a test applicable to
compelled funding of generic advertising in the context of this mandated cooperative
association.
The appropriate level of scrutiny for the review of a regulation that restricts or
compels speech is dependent on the nature of that regulation and the context in which it is
applied. For example, under the First Amendment, a content-based regulation that affects
speech, other than commercial speech, is subject to the most exacting scrutiny. To pass

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constitutional muster, the government must show that the regulation is necessary to serve
a compelling state interest and is narrowly drawn to achieve that end. (Simon &
Schuster, Inc. v. Members of N. Y. State Crime Victims Bd. (1991) 502 U.S. 105, 118.)
However, if the regulation at issue is unrelated to the content of the speech, it qualifies
for intermediate scrutiny review. Such a regulation will be upheld if it furthers an
important or substantial government interest that would be achieved less effectively
absent the regulation. (Turner Broadcasting System, Inc. v. FCC (1994) 512 U.S. 622,
662.) This intermediate test is also applied to First Amendment review of commercial
speech. (Central Hudson Gas & Elec. v. Public Serv. Comm'n. (1980) 447 U.S. 557,
566.) Finally, the context in which the subject speech is compelled may impact the
analysis. As discussed in further detail below, where there is a sufficient reason to
require persons to associate with one another, those compelled to cooperate in this
manner may also be compelled to fund speech that is “germane” to the purposes of the
association. (U.S. v. United Foods, Inc. (2001) ___ U.S.___ [121 S.Ct. 2334, 2340].)
Here, the analysis must begin with the parameters set forth by our Supreme Court
in Gerawan. As with the First Amendment, article I’s right to freedom of speech may be
implicated by the use of money. (Gerawan Farming, Inc. v. Lyons, supra, 24 Cal.4th at
p. 491.) Further, the First Amendment and article I both protect commercial speech, at
least in the form of truthful and nonmisleading messages about lawful products and
services. (24 Cal.4th at pp. 493, 498-499.) However, unlike the First Amendment in this
context, “article I’s right to freedom of speech, without more, would not allow
compelling one who engages in commercial speech to fund speech in the form of
advertising that he would otherwise not, when his message is about a lawful product or
service and is not otherwise false or misleading.” (24 Cal.4th at pp. 509-510.)
Consequently, compelled funding of generic advertising under the California Plum
Marketing Program implicates article I’s free speech clause.

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The context in which this compelled funding arises is also critical to the analysis.
The California Plum Marketing Program, a marketing order issued under the California
Marketing Act (CMA), requires the speech subsidy as part of a broader collective
enterprise. This program establishes and authorizes the California Plum Marketing Board
to: pursue research; conduct advertising; implement sales promotion and market
development programs; and institute grade and quality standards and inspections.
(Gerawan Farming, Inc. v. Lyons, supra, 24 Cal.4th at p. 508; Voss v. Superior Court
(1996) 46 Cal.App.4th 900, 905.) This detailed regulatory scheme displaces “‘many
aspects of independent business activity that characterize other portions of the economy
in which competition is fully protected by the antitrust laws.’” (Gerawan Farming, Inc.
v. Lyons, supra, 24 Cal.4th at p. 507, citing Glickman v. Wileman Brothers & Elliott, Inc.
(1997) 521 U.S. 457, 469.)
The CMA was patterned after, and enacted within days of, the federal Agricultural
Marketing Agreement Act of 1937 (AMAA). (Gerawan Farming, Inc. v. Lyons, supra,
24 Cal.4th at p. 478.) One purpose behind both Acts was to establish and maintain
orderly marketing conditions and fair prices for agricultural commodities. (Ibid.)
It is beyond dispute that the CMA is critical to the California economy with
respect to the future continued production of adequate supplies of food, fiber and other
farm products. (Voss v. Superior Court, supra, 46 Cal.App.4th at pp. 907-908.) Before
the CMA was promulgated, California agriculture was chaotic. (Id. at p. 907.) Each fruit
or vegetable grower attempted to be the first in the market with his or her commodity in
order to take advantage of the premium prices paid for early shipments. (Ibid.) This led
to the marketing of inadequately ripened produce and the glutting of the market during
the peak season with poor quality commodities. (Ibid.) In an attempt to enhance the
attractiveness of the produce, growers would often resort to deceptive packaging,
improper sampling, and false grading. (Ibid.) Consequently, consumer acceptance of

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California fruits and vegetables was adversely affected and California’s agricultural
wealth was unreasonably and unnecessarily wasted. (Ibid.)
Thus, it must be concluded that the state-mandated association of plum producers
through the California Plum Marketing Program is justified. Ensuring a stable and
consistent plum market constitutes a sufficiently compelling reason to require
cooperation among growers. In light of the existence of a legitimate basis for the
compelled association, the next step is to determine how this association impacts the
concomitant speech.
Analogous situations have arisen in the context of unions and state bar
associations. For example, a state may compel nonunion employees who benefit from
the union’s collective bargaining efforts to pay service fees to the union. (Abood v.
Detroit Board of Education (1977) 431 U.S. 209, 217-223.) This compelled association
is justified by the state’s interest in facilitating collective bargaining and preventing “‘free
riders.’” (Id. at pp. 220-222.) Nevertheless, there are limits on a union’s use of the
mandatory fee. The nonmembers may prevent the union from using their contributions to
fund the expression of political and ideological views unrelated to collective bargaining.
(Id. at p. 234.)
Similarly, a state’s interest in regulating the legal profession and improving the
quality of legal services justifies compulsory bar membership. (Keller v. State Bar of
California (1990) 496 U.S. 1, 13-14.) Therefore, the state bar association may
“constitutionally fund activities germane to those goals out of the mandatory dues of all
members.” (Id. at p. 14.) However, the bar association may not fund its own political
expression in this manner. (Ibid.)
In sum, the state may require a person to support an organization if there is a
sufficiently compelling reason to do so. However, the organization’s use of mandatory
contributions must be “germane” to the purposes justifying the support.

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As noted above, the compelled association under the Plum Marketing Program is
justified by the state’s interest in maintaining orderly marketing conditions and fair prices
for agricultural commodities. In light of the significant role California agriculture plays
with respect to both the economy and the food supply, it must be concluded that this
interest is comparable in scope and importance to either facilitating collective bargaining
or regulating the legal profession. In other words, as with the situations presented in
Abood and Keller, there is an overriding associational purpose already requiring a
contribution of money that may also allow a compelled subsidy for speech that is in
furtherance of the program. (Cf. U.S. v. United Foods, Inc., supra, ___ U.S. at p. ___
[121 S.Ct. at p. 2340].) Consequently, the guidelines set forth in Abood and Keller
should be used to determine what expenditures are permissible under article I’s free
speech clause.
The next task is to refine the Abood/Keller test. Although generally referred to as
the “germaneness” test, it encompasses more than a determination of whether the speech
is relevant to the goals of the association. Rather, when a member of a compelled
association objects to being burdened with particular expenditures “the guiding standard
must be whether the challenged expenditures are necessarily or reasonably incurred” for
the purpose of furthering those goals. (Keller v. State Bar of California, supra, 496 U.S.
at p. 14.) Requiring more than a rational relationship and less than a narrowly tailored
service of a compelling state interest, this test essentially constitutes an intermediate level
of scrutiny. Moreover, this analysis is not specific to a particular type of speech.
Compelled contributions to commercial speech, as well as political or ideological speech,
are subject to this test. (U.S. v. United Foods, Inc., supra, ___ U.S. at p. ___ [121 S.Ct. at
p. 2339].)
As stated above, the California Supreme Court opined that compelled generic
advertising would not be allowed under article I “without more.” (Gerawan Farming,
Inc. v. Lyons, supra, 24 Cal.4th at pp. 509-510.) The “more” present in this case is the

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overriding associational purpose behind the California Plum Marketing Program, i.e., the
state’s interest in maintaining orderly marketing conditions and fair prices for agricultural
commodities. Accordingly, the intermediate level of review should be employed. Thus,
to pass muster under article I’s free speech clause, the expenditures for the generic
advertising at issue must be found to be a necessary or reasonable means to achieve the
program goal of maintaining and expanding the market for plums. The burden is on the
state to show that the generic advertising meets this test. (Rubin v. Coors Brewing Co.
(1995) 514 U.S. 476, 487.)
However, due to the procedural posture of this case, there is no evidentiary record.
Accordingly, there is no basis for evaluating the validity of the compelled funding at this
time. Any attempt to do so would entail nothing more than conjecture and speculation.
As noted by the Gerawan court, “we know not what facts may one day be proved.”
Gerawan Farming, Inc. v. Lyons, supra, 24 Cal.4th at p. 514.) Consequently, I would
remand this case for further proceedings to develop those facts.
The majority opinion turns on the conclusion that, because a proposed marketing
program must be approved by a majority of the growers, the governmental interest in the
underlying regulatory program is “tenuous” and “based on findings of necessity that are
wholly illusory.” Consequently, the majority holds that the operation of the generic
advertising portion of the Plum Marketing Program does not demonstrate the exercise of
a substantial government interest. The opinion implies that the holding might be
otherwise if the Legislature could unilaterally impose a marketing order.
I disagree that permitting the growers to reject a proposed marketing order dilutes
the governmental interest in establishing and maintaining orderly marketing conditions
and fair prices for agricultural commodities. Rather, the Legislature has merely
recognized its own limitations and has therefore entrusted certain aspects of the
regulation of the agricultural commodities market to those who better understand the
industry, i.e., those who produce or otherwise deal with such products. (Voss v. Superior

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Court, supra, 46 Cal.App.4th at p. 907.) However, this recognition does not undermine
the governmental interest in, and justification for, the compelled association of the
growers.
In conclusion, I believe that compelled contributions to fund generic advertising
should be evaluated through the use of the intermediate scrutiny test outlined above.
Further, this matter should be remanded to develop a sufficient evidentiary record.
_____________________________
Levy, J.

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