Gerawan Farming v. CA Table Grape Comm.

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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for
publication or ordered published for purposes of rule 977.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
GERAWAN FARMING, INC., et al.,
Plaintiffs and Appellants,
v.
CALIFORNIA TABLE GRAPE
COMMISSION,
Defendant and Respondent.
F035605
(Super. Ct. No. 642546-6 &
636636-3)
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Stephen J.
Kane, Judge.
Brian C. Leighton, Mayer, Brown & Platt, Michael W. McConnell and Sharon
Swingle for Plaintiffs and Appellants.
SEE DISSENTING OPINION OF LEVY, J.
Baker, Manock & Jensen, Robert D. Wilkinson, Kendall L. Manock, Linda
Berg Othman; Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant
Attorney General, Mary E. Hackenbracht, Assistant Attorney General, Walter E.
Wunderlich, Edna Walz and Tracy L. Winsor for Defendant and Respondent.
Kahn, Soares & Conway, George H. Soares, Dale A. Stern and Robert S.
Hedrick for California Avocado Commission, California Apple Commission,

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California Asparagus Commission, California Cut Flower Commission, California
Date Commission, California Egg Commission, California Forest Products
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-
In Gerawan Farming, Inc. v. Lyons (Dec. 17, 2001, F031142) ___ Cal.App.4th
___, filed this day, we have held that the California Plum Marketing Program (the
Program), authorized and established pursuant to the California Marketing Act of
1937, as amended, Food and Agriculture Code section 58601 et seq.,
unconstitutionally deprives objecting plum producers of their right to freedom of
speech under article I, section 2, subdivision (a) of the California Constitution
(hereafter article I), insofar as the Program assesses the objecting producers for
advertising and other speech-related functions.
Before us in the present case is a challenge to the similar advertising and
speech-related activities of respondent California Table Grape Commission.
Respondent’s programs are not established pursuant to the California Marketing Act of
1937 but, instead, are authorized by the Ketchum Act, Food and Agriculture Code
section 65500 et seq. We conclude that the Ketchum Act shares the constitutional
infirmities of the California Marketing Act of 1937. Accordingly, we hold that
objecting grape producers are entitled to withhold from the Table Grape Commission
any amount assessed by it for use in advertising and other speech-related activities.

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Facts and Procedural History
Appellants Delano Farms, Inc., and Gerawan Farming, Inc., filed separate
actions seeking to prohibit respondent from compelling them to pay assessments for
speech-related expenses of the Table Grape Commission. The complaints sought
refunds of earlier assessments paid by appellants and, in the case of Gerawan’s
complaint, an order that respondent establish a mechanism for designating in advance
the portion of funds that will be used for speech-related purposes. The complaints
sought relief under various state and federal constitutional provisions, including
article I.
The trial court struck certain portions of the complaints and granted
respondent’s demurrers to the complaints without leave to amend. The court entered
judgment for respondent in each of the actions. Thereafter, the trial court granted the
parties’ joint motion to consolidate the two cases for purposes of appeal. Appellants
filed a timely notice of appeal. We ordered the present appeal coordinated with
Gerawan Farming, Inc. v. Lyons, supra, ___ Cal.App.4th ___ for purposes of briefing
and argument.
As relevant here, both complaints alleged respondent engaged in a program of
generic advertising with which appellants disagreed. In addition, the complaints
alleged respondent used money generated from mandatory assessments to engage in
lobbying and litigation to attain political and ideological goals. The complaints alleged
each appellant had been assessed hundreds of thousands of dollars to support the
speech-related activities of respondent.
Discussion
The activities of the Table Grape Commission are authorized by a different
statutory scheme than those of the Plum Marketing Board. As alleged in the
complaints in the present case, those activities are significantly more wide-ranging

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than the generic advertising program implemented by the Plum Marketing Board. The
complaints allege respondent engages in political lobbying and politically motivated
litigation, in addition to a more traditional program of generic marketing and
advertising.
In addition, the laws authorizing respondent’s activities are buttressed by
extensive and recent legislative findings concerning the importance of the table grape
industry to the economic health of California and the physical health of Californians.
(See Food & Agr. Code, §§ 63901, 65500.) Although similar findings undoubtedly
could be made regarding plums, the existing findings arguably are weaker and more
remote than those supporting the exercise of the state’s police power in establishment
of the Table Grape Commission. (See Food & Agr. Code, §§ 58651-58654.)
We acknowledge these differences between the programs at issue in the present
case and in Gerawan Farming, Inc. v. Lyons, supra, ___ Cal.App.4th ____.
Nevertheless, the programs share fundamental features that, we believe, make
them indistinguishable under the guidelines established for us in Gerawan Farming,
Inc. v. Lyons (2000) 24 Cal.4th 468. Those features are (1) the programs engage in
speech-related activities; (2) the programs employ state power to compel payment of
assessments from unwilling participants; and (3) the programs come into existence
(and continue in existence) only upon a favorable vote by those to be regulated by the
program. As discussed in our opinion in Gerawan Farming, Inc. v. Lyons, supra, ___
Cal.App.4th ___, the first two aspects result in the conclusion that the programs
implicate the free speech rights of involuntary participants; the third aspect results in
the negation of any asserted governmental interest in the programs that might
otherwise be sufficient to justify impingement on the participants’ free speech rights.
Formation of respondent was initially authorized by Food and Agriculture Code
section 65550. The power of respondent to implement its programs and establish an

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assessment upon producers, however, was made expressly dependent upon a favorable
result in a referendum of producers. (See Food & Agr. Code, § 65573.) Further,
respondent is required to conduct a referendum on its continued existence every five
years, and to cease operations upon a negative vote of producers. (See Food & Agr.
Code, § 65675.)
Under these circumstances, the Legislature’s findings concerning the necessity
and desirability of respondent’s advertising and promotional programs are entirely
illusory. It is not rational to conclude that:
-- conditions in the grape industry that respondent’s programs are to
address “vitally concern the health, peace, safety and general welfare of
the people of this state” (Food & Agr. Code, § 65500, subd. (e));
-- it is “necessary and expedient in the public interest” to “protect and
enhance the reputation of California fresh grapes” (Food & Agr. Code,
§ 65500, subd. (e)); and
-- the Table Grape Commission provides a “benefit to the entire industry
and all of the people of this state” (Food & Agr. Code, § 63901, subd.
(c)),
but only if a majority of growers agree to permit the program to exist. Accordingly,
we conclude respondent’s actions, under the current statutory authorization, in
assessing and collecting from objecting producers funds to conduct commercial,
political, ideological, or other speech-related activities, violate the article I free speech
right of objecting producers.

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Disposition
The judgment is reversed. The matter is remanded for trial or other proceedings
necessary to establish the portion of respondent’s budget used for speech-related
activities and to establish the nature and extent of the remedies to which appellants are
entitled. Appellants are awarded their costs on appeal.
______________________________
Vartabedian, Acting P. J.
I CONCUR:
________________________________
Harris, J.

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LEVY, J.
I respectfully dissent.
The majority opinion acknowledges that the scope of the authority granted to the
California Table Grape Commission varies significantly from that granted to the
California Plum Marketing Board. Nevertheless, based on its conclusion that the need
for a favorable vote by the growers to implement a program negates any asserted
governmental interest in that program, the majority reverses this case for the reasons set
forth in Gerawan Farming, Inc. v. Lyons (Dec. 17, 2001, F031142) ___ Cal.App.4th ___.
As discussed in my dissent in Gerawan Farming, Inc. v. Lyons, supra, I disagree
with the majority’s premise. Permitting the growers to vote in a referendum on the
provisions of the Ketchum Act pursuant to Food and Agricultural Code section 65573
does not dilute the government interest in aiding fresh grape producers in the marketing
of their commodity. (Food & Agr. Code, § 65500.) Rather, the Legislature has merely
recognized its own limitations and has therefore entrusted certain aspects of the
regulation of the California fresh grape market to those who better understand the
industry. However, this recognition does not undermine the governmental interest in, and
justification for, the compelled association of the growers.
Thus, I disagree with the majority’s disposition of this case. I also believe it is
premature. A factual record must be developed below to enable the case to be properly
evaluated. For example if, upon remand, it is determined that the Ketchum Act parallels
the California Marketing Act with respect to the level of regulation of the industry, the
compelled generic advertising component should be scrutinized under the intermediate
test outlined in my dissent in Gerawan Farming, Inc. v. Lyons, supra. However, if these
acts vary considerably on key issues, a different analysis might be needed. Additionally,
it must be determined what impact, if any, the First Amendment has on this case. In sum,

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without additional facts and legal argument, this court is not in a position to decide the
constitutional validity of the Table Grape Commission’s generic advertising program.
_____________________________
Levy, J.

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