MICHIGAN CANNERS & FREEZERS ASSOCIATION, INC., ET AL. v. AGRICULTURAL
MARKETING AND BARGAINING BOARD ET AL.
APPEAL FROM THE SUPREME COURT OF MICHIGAN
Argued March 19, 1984
Decided June 11, 1984
The federal Agricultural Fair Practices Act of 1967 (AFPA) was enacted to enable individual farmers and other producers of agricultural commodities to join together voluntarily in cooperative associations in order to protect their marketing and bargaining position as against large and powerful agricultural processors. The AFPA makes it unlawful for "handlers" - defined to include both processors and producers' associations - to coerce any producer "in the exercise of his right to join . . . or to refrain from joining" a producers' association, 7 U.S.C. 2303(a), or to coerce any producer to enter into or terminate a marketing contract with a producers' association or a contract with a handler, 2303(c). The Michigan Agricultural Marketing and Bargaining Act (Michigan Act) includes the same prohibitions as the AFPA, but goes beyond it by establishing a state-administered system by which producers' associations are organized and certified as exclusive bargaining agents for all producers of a particular commodity. Under this system, if an association's membership constitutes more than 50% of the producers of a particular commodity and its members' production accounts for more than 50% of the commodity's total production, the association may be accredited as the exclusive bargaining agent for all producers of that commodity. Upon accreditation of the association, all producers of the commodity, regardless of whether they have chosen to become members of the association, must pay a service fee to the association and must abide by the contracts the association negotiates with processors. The Michigan Agricultural Cooperative Marketing Association (MACMA), a producers' association accredited under the Michigan Act, is the sole sales and bargaining representative for asparagus producers in the State. After the MACMA had negotiated contracts on behalf of Michigan asparagus growers to sell the asparagus crop for a certain year, appellant asparagus growers and association of asparagus processors, sued MACMA in state court seeking a declaratory judgment that the provisions of the Michigan Act requiring service fees and mandatory adherence to an association-negotiated contract are pre-empted by the AFPA. The Michigan Supreme Court rejected appellants' claim, holding that the [467 U.S. 461, 462] AFPA prohibited only processor misconduct, whereas the challenged provisions of the Michigan Act regulated producers' activities.
The challenged provisions of the Michigan Act are pre-empted by the AFPA. Pp. 469-478.
BRENNAN, J., delivered the opinion for a unanimous Court. [467 U.S. 461, 463]
Joseph G. Scoville argued the cause for appellants. With him on the briefs were Ernest M. Sharpe and Jon D. Botsford.
John H. Garvey argued the cause for the United States as amicus curiae urging reversal. With him on brief were Solicitor General Lee and Deputy Solicitor General Geller.
James A. White argued the cause for appellees and filed a brief for appellee Michigan Agricultural Cooperative Marketing Association, Inc. With him on the brief were Theodore W. Swift and Michael J. Schmedlen. Frank J. Kelley, Attorney General of Michigan, Louis J. Caruso, Solicitor General, and Charles D. Hackney, Henry J. Boynton, and Michael J. Moquin, Assistant Attorneys General, filed a brief for appellee Agricultural Marketing and Bargaining Board. *
[ Footnote * ] Briefs of amici curiae urging reversal were filed for the American Frozen Food Institute by James F. Rill and Norman G. Knopf; and for the National Food Processors Association by H. Edward Dunkelberger, Jr.
Briefs of amici curiae urging affirmance were filed for the American Farm Bureau Federation by John J. Rademacher and C. David Mayfield; and for the California Tomato Grower's Association et al. by Gerald D. Marcus.
JUSTICE BRENNAN delivered the opinion of the Court.
A perceived need to help the American farmer in his economic relations with large and powerful agricultural processors has moved Congress and various States to enact laws designed to bolster the farmer's bargaining power when bringing his goods to market. This case involves two such laws: the federal Agricultural Fair Practices Act of 1967 and the State of Michigan's Agricultural Marketing and Bargaining Act (Michigan Act). The question presented is whether certain provisions of the Michigan Act, which accord agricultural cooperative associations exclusive bargaining authority for the sale of agricultural products, are pre-empted by the federal Act. The Supreme Court of Michigan held that the Michigan Act is not pre-empted. 416 [467 U.S. 461, 464] Mich. 706, 332 N. W. 2d 134 (1982). We noted probable jurisdiction, 464 U.S. 912 (1983), and now reverse.
The federal Agricultural Fair Practices Act (AFPA), 82 Stat. 93, 7 U.S.C. 2301 et seq., protects the right of farmers and other producers 1 of agricultural commodities to join cooperative associations through which to market their products. 2 Responding to "the growing concentration of power in the hands of fewer and larger buyers [of agricultural products]," S. Rep. No. 474, 90th Cong., 1st Sess., 2-3 (1967), Congress enacted the AFPA to rectify a perceived imbalance in bargaining position between producers and processors of such products. Although the Act's principal purpose is to protect individual producers from interference by processors when deciding whether to belong to a producers' association, the Act also protects the producer from coercion by associations of producers. The AFPA thus provides that it is unlawful for either a processor or a producers' association to engage in practices that interfere with a producer's freedom to choose whether to bring his products to market himself or to sell them through a producers' cooperative association. 7 U.S.C. 2303. Specifically, 2303(a) forbids "handlers" - [467 U.S. 461, 465] defined to include both processors and producers' associations 3 - to "coerce any producer in the exercise of his right to join and belong to or to refrain from joining or belonging to an association of producers." Similarly, 2303(c) forbids handlers to "coerce or intimidate any producer to enter into, maintain, breach, cancel, or terminate a membership agreement or marketing contract with an association of producers or a contract with a handler." 4 [467 U.S. 461, 466]
The Michigan Act, Mich. Comp. Laws 290.701 et seq. (1984), also designed to facilitate collective action among producers, includes the same prohibitions as the federal Act. It goes beyond the federal statute, however, by extensively regulating the activities of producers' associations. Most importantly, the Michigan Act establishes a state-administered system by which producers' associations are organized and certified as exclusive bargaining agents for all producers of a particular commodity. 290.703, 290.707. Under Michigan's system, if an association's membership constitutes more than 50% of the producers of a particular commodity, and its members' production accounts for more than 50% of the commodity's total production, the association may apply to the state Agricultural Marketing and Bargaining Board for accreditation as the exclusive bargaining agent for all producers of that particular commodity. 290.707(c). 5 When the [467 U.S. 461, 467] Board accredits an association as the agent for the producers of a particular commodity, all producers of that commodity, regardless of whether they have chosen to become members [467 U.S. 461, 468] of the association, must pay a service fee to the association and must abide by the terms of the contracts the association negotiates with processors. 290.710(1), 290.713(1). 6 Thus, the Michigan Act creates an "agency shop" arrangement among agricultural producers whenever there is majority support for such an arrangement among the producers of a particular commodity.
The Michigan Agricultural Cooperative Marketing Association, Inc. (MACMA), a producers' association accredited under the Michigan Act, is the sole sales and bargaining representative for asparagus producers in the State. 7 In 1974, as permitted by the Michigan Act, MACMA negotiated contracts on behalf of Michigan asparagus growers to sell the 1974 asparagus crop. In response, appellants Dukesherer Farms and Ferris Pierson, asparagus growers that would be bound by the contract, along with the Michigan Canners & Freezers Association, Inc., an association of asparagus processors, 8 sued MACMA in state court seeking a declaratory judgment that those provisions of the Michigan Act requiring service fees and mandatory adherence to an association-negotiated contract are pre-empted by the AFPA. The Supreme Court of Michigan rejected appellants' claim, holding that the Michigan Act operated in an area that the federal [467 U.S. 461, 469] Act did not regulate. 416 Mich. 706, 332 N. W. 2d 134 (1976). Specifically, the Michigan court held that the federal Act prohibited only processor misconduct, whereas the challenged portions of the Michigan Act regulated producers' activities. We disagree.
Federal law may pre-empt state law in any of three ways. First, in enacting the federal law, Congress may explicitly define the extent to which it intends to pre-empt state law. E. g., Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95 -96 (1983). Second, even in the absence of express pre-emptive language, Congress may indicate an intent to occupy an entire field of regulation, in which case the States must leave all regulatory activity in that area to the Federal Government. E. g., Fidelity Federal Savings & Loan Assn. v. De la Cuesta, 458 U.S. 141, 153 (1982); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). Finally, if Congress has not displaced state regulation entirely, it may nonetheless pre-empt state law to the extent that the state law actually conflicts with federal law. Such a conflict arises when compliance with both state and federal law is impossible, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142 -143 (1963), or when the state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67 (1941). See also Fidelity Federal Savings & Loan Assn., supra, at 153.
It is the last basis of pre-emption that applies in this case. The AFPA contains no pre-emptive language; nor does it reflect a congressional intent to occupy the entire field of agricultural-product marketing. Indeed, the Act states that it "shall not be construed to change or modify existing State law." 7 U.S.C. 2305(d). 9 And, as this Court has recognized, [467 U.S. 461, 470] "the supervision of the readying of foodstuffs for market has always been deemed a matter of peculiarly local concern." Florida Lime & Avocado Growers, Inc., supra, at 144.
Appellants contend that the service-fee and mandatory-representation provisions of the Michigan Act frustrate the purpose and objective of the AFPA by imposing on unwilling producers an exclusive bargaining arrangement with associations. In their view, although Congress' chief interest in enacting the AFPA was to facilitate the growth of agricultural cooperative associations, an equally important congressional objective was to preserve the free choice of producers to join associations or to remain independent. The Michigan Act, appellants contend, deprives producers of that choice and allows associations, in effect, to coerce producers into association affiliation. 10
We turn first to the wording of the AFPA. The Act begins with a finding that "the marketing and bargaining position of individual farmers will be adversely affected unless [467 U.S. 461, 471] they are free to join together voluntarily in cooperative organizations as authorized by law." 2301 (emphasis added). More significantly, however, the theme of voluntariness is carried through to the provisions of the Act that define those practices that are prohibited. Thus, in addition to forbidding various practices that could discourage producers from joining associations, the Act explicitly makes unlawful the coercion of a producer "in the exercise of his right . . . to refrain from joining or belonging to an association of producers," and the coercion of a producer to "enter into [or] maintain . . . a membership agreement or marketing contract with an association of producers." 2303(a) and (c) (emphasis added). Moreover, by defining the term "handler" to include producers' associations as well as processors of agricultural products, see supra, at 464-465, the Act prohibits interference by the former to the same extent that it prohibits interference by the latter. In short, just as the Act forbids processors to interfere in a producer's decision to become or remain affiliated with an association, it also forbids an association of producers to interfere in that decision by coercing producers to belong to, or participate in a marketing contract with, the association.
Congress' intent to shield producers from coercion by both processors and producers' associations is confirmed by the legislative history of the AFPA, which reveals that the question of the producer's free choice was a central focus of congressional attention during the passage of the Act. Although the AFPA began as a bill aimed solely at the threat of processor coercion, its orientation shifted as it progressed through Congress to one of sheltering the producer from coercion in either direction.
The bill originally introduced in the Senate, S. 109, 89th Cong., 1st Sess. (1965), did not explicitly protect the producer's right to remain independent from an association and for that reason provoked considerable criticism in the hearings that followed. Critics of the bill offered several reasons for [467 U.S. 461, 472] prohibiting association coercion to the same extent as processor coercion. First, some producers stated that they preferred to remain independent because they believed they could earn more money if they marketed their products themselves. 11 Second, processors testified that unless associations were also prohibited from pressuring producers, there would be a serious risk that the associations would attain a bargaining position of monopoly proportion, to the detriment of not only the processor, but the consumer as well. 12 Third, witnesses testified that a prohibition on interference by producers' associations would promote competition on the merits among associations seeking membership. 13 Fourth, many handlers testified that they would be disadvantaged in the quality of the product they could buy as well as the price they would have to pay if producers' association were permitted substantially to diminish the ranks of the independent producer. 14 Finally, witnesses testified that the producer's right to remain independent of an association was simply "a basic American right" deserving of protection. 15 [467 U.S. 461, 473]
In response to these concerns, the Senate passed an amended bill that prohibited coercion by both processors and associations, thereby protecting the producer's right to remain independent. The new bill opened with a legislative finding that "the marketing and bargaining position of individual farmers will be adversely affected unless they are free to join together or not join together in cooperative organizations as authorized by law." 113 Cong. Rec. 21410 (1967) (emphasis added). The bill went on to provide:
The Senate bill was next referred to the House Committee on Agriculture, ibid., which heard testimony from producers' associations opposed to their inclusion in the prohibited-practices section of the bill. 17 The Committee rejected their plea, however, and declined to adopt a proposed amendment to the bill that would have limited its application to processors. H. R. Rep. No. 824, 90th Cong., 1st Sess., 4-5 (1967). Ultimately, the House deleted the explicit reference to associations of producers from the prohibited-practices section of the bill, 114 Cong. Rec. 7449 (1968), and it amended the legislative findings and declaration of policy to read: "the marketing and bargaining position of individual farmers will be adversely affected unless they are free to join together voluntarily in cooperative organizations as authorized by law." Id., at 7469 (emphasis added). 18 In so doing, however, the House indicated that it did not intend to alter the substance of the bill. Representative Sisk explained:
The Senate agreed to the House amendments without debate. Id., at 8419. Hence, in passing S. 109, both the House and the Senate unequivocally expressed an intent to prohibit producers' associations from coercing a producer to agree to membership or any other agency relationship that would impinge on the producer's independence. It would appear, therefore, that despite the fact that the Michigan Act and the AFPA share the goal of augmenting the producer's bargaining power, the Michigan Act nonetheless conflicts with the AFPA by establishing "accredited" associations that wield the power to coerce producers to sell their products according to terms established by the association and to force producers to pay a service fee for the privilege.
The Michigan Supreme Court held that "[w]hile 2303 makes it unlawful for a handler to coerce a producer to `join or belong to' an association, it does not forbid a state from requiring exclusive representation of individual producers where a producer majority sees fit." 416 Mich., at 719, 332 N. W. 2d, at 139. The Michigan Act, however, empowers producers' associations to do precisely what the federal Act [467 U.S. 461, 478] forbids them to do. Once an association reaches a certain size and receives its accreditation, it is authorized to bind nonmembers, without their consent, to the marketing contracts into which it enters with processors. In effect, therefore, an accredited association operating under the Michigan Act may coerce a producer to "enter into [or] maintain . . . a marketing contract with an association of producers or a contract with a handler" - a clear violation of 2303(c). 20 In addition, although the Michigan Act does not compel a producer to join an association, it binds him to the association's marketing contracts, forces him to pay fees to the association, and precludes him from marketing his goods himself. See n. 6, supra. In practical effect, therefore, the Michigan Act imposes on the producer the same incidents of association membership with which Congress was concerned in enacting 2303(a).
In conclusion, because the Michigan Act authorizes producers' associations to engage in conduct that the federal Act forbids, it "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S., at 67 . 21 To that extent, therefore, the Michigan Act is pre-empted by the AFPA, and the judgment of the Supreme Court of Michigan is reversed.
[ Footnote 2 ] Under 1 of the Capper-Volstead Act, 7 U.S.C. 291, and 6 of the Clayton Act, 15 U.S.C. 17, most activities of agricultural cooperatives were already exempt from the antitrust laws. Thus, producers already had a legal right to belong to such associations. The AFPA went further than the prior Acts by protecting the right against economic coercion.
The term "association of producers," also referred to herein as "producers' associations," is defined to mean "any association of producers of agricultural products engaged in marketing, bargaining, shipping, or processing as defined in section 1141(j) of title 12, or in section 291 of this title." 7 U.S.C. 2302(c).
[ Footnote 3 ] The term "handler" generally refers to buyers and processors of agricultural products. As the AFPA evolved through the legislative process, however, and Congress decided to apply most of its prohibitions to producers' associations as well as to handlers, Congress expanded the definition of "handler" to include associations of producers. Thus 7 U.S.C. 2302(a) provides:
The term "processor" is used herein to refer to all "handlers" under the federal Act except producers' associations acting in their capacity as marketing representatives of producers.
[ Footnote 4 ] Section 2303 provides in full:
[ Footnote 5 ] Section 290.707 provides in pertinent part:
[ Footnote 6 ] Although the Michigan Act does not explicitly prohibit a producer represented by an accredited association from negotiating directly with a processor, it does prohibit the processor from negotiating with such a producer. 290.704(1)(h). The Michigan Act thus effectively eliminates direct dealing between a producer that is represented by an accredited association and a processor.
[ Footnote 7 ] The bargaining unit for which MACMA is accredited includes all Michigan farmers who produced a certain minimum quantity of asparagus during a defined marketing period.
[ Footnote 8 ] The Michigan Canners & Freezers Association, Inc., is an association of fruit and vegetable processors whose members process asparagus. Dukesherer Farms, Inc. is a corporation engaged in asparagus farming. And Ferris Pierson is an individual engaged in asparagus farming.
[ Footnote 9 ] Appellee MACMA argues that this provision eliminates the preemptive effect the AFPA might otherwise have on the Michigan Act, despite the fact that the Michigan Act was enacted after the enactment of the [467 U.S. 461, 470] AFPA. Brief for Appellee MACMA 8-14. MACMA contends that at the time of the passage of the AFPA, California's Agricultural Prorate Act, upheld by this Court in Parker v. Brown, 317 U.S. 341 (1943), contained provisions "similar" to the provisions of the Michigan Act. Even if we were to accept MACMA's interpretation of 2305(d), however, this argument is unpersuasive. The California Prorate Act bears no relevant similarity to the Michigan Act. The California Act provides for the orderly marketing of certain commodities by imposing marketing plans that restrict the quantity of a commodity that farmers may produce, regulate the flow of commodities to market, and establish grade and quality requirements. The basic goal of the California Act, as identified in Parker v. Brown, is to minimize the adverse effects of a market surplus. 317 U.S., at 355 .
[ Footnote 10 ] Appellants argue that the AFPA accords processors the right to deal with producers individually and that the Michigan Act deprives processors of that right. This conflict, they contend, provides an additional basis upon which to decide that the Michigan Act is pre-empted. In light of our disposition of appellants' primary claim, however, we need not address that question.
[ Footnote 11 ] See, e. g., Agricultural Producers Marketing Act: Hearings on S. 109 before a Subcommittee of the Senate Committee on Agriculture and Forestry, 90th Cong., 1st Sess., 144 (statement of Earl W. Kintner, National Tax Equality Association), 173-183 (statement of Paul L. Phillips) (1967) (hereinafter cited as 1967 Senate Hearings).
[ Footnote 12 ] See, e. g., Discrimination Against Members of Farmer Cooperatives: Hearings on S. 109 before the Subcommittee of the Senate Committee on Agriculture and Forestry, 89th Cong., 2d Sess., 135 (1966) (statement of A. Starke Taylor Jr., Independent Cotton Industries Association) (hereinafter cited as 1966 Senate Hearings); 1967 Senate Hearings, at 110, 113-114 (statement of W. W. Holding III, American Cotton Shippers Association), 151 (statement of Earl W. Kintner, National Tax Equality Association), 196 (statement of Irving Isaacson, Maine Poultry Associates).
[ Footnote 13 ] See, e. g., 1966 Senate Hearings, at 187 (statement of Harry L. Graham, National Grange).
[ Footnote 14 ] See, e. g., 1967 Senate Hearings, at 69 (statement of Edward Brown Williams, National Association of Frozen Food Packers), 91-92 (statement of G. Ted Cameron, National Broiler Council).
[ Footnote 15 ] 1967 Senate Hearings, at 10-11 (statement of Sen. Williams). See, e. g., 1966 Senate Hearings, at 146 (statement of Donald G. Smith, Texas [467 U.S. 461, 473] Independent Ginners Association), 196-197 (statement of Edward Dunkelberger, National Canners Association).
In addition, much of the testimony focused on the case of vertically integrated producers' associations that process their members' products. As several witnesses explained, because such associations compete in the processing market, the one-sided orientation of the bill provided these associations with an unfair competitive advantage over other processors. Indeed, many of these processors feared that the bill would, for that reason, drive them entirely out of business. See, e. g., id., at 135 (statement of A. Starke Taylor, Jr., Independent Cotton Industries Association), 138-140 (statement of Paul L. Courtney, National Association of Wholesalers); 1967 Senate Hearings, at 122-123 (statement of Herman Eubank, Texas Independent Ginners Association). The Michigan Act, however, effectively excludes vertically integrated associations from the accreditation process. In calculating the representational strength of an association seeking accreditation, the Michigan Act provides that "[t]he board shall exclude from [the total quantity of a commodity produced] any quantity of the agricultural commodity contracted by producers with producer owned and controlled processing cooperatives and any quantity produced by handlers." 290.707(c). See n. 5, supra.
[ Footnote 16 ] 4. Section 4(d), which addresses the provision of "inducements and rewards" to producers, applies only to those seeking to have a producer refuse or cease to belong to an association, an approach that was ultimately adopted in the AFPA. See 7 U.S.C. 2303(d). The Senate Report explained that "[t]he association of producers should not be prohibited from offering inducements to producers to belong to an association, since it is quite proper for an association to pursue vigorously the voluntary organization of farmers in its attempt to secure a better bargaining position for farmers." S. Rep. No. 474, 90th Cong., 1st Sess., 6 (1967).
[ Footnote 17 ] Agricultural Fair Trade Practices: Hearings on S. 109 before the House Committee on Agriculture, 90th Cong,. 1st Sess., 66-67 (statement of Harry L. Graham, National Grange), 79 (statement of Tony T. Dechant, National Farmers Union), 89-90 (statement of Robert N. Hampton, National Council of Farmer Cooperatives), 109-110 (statement of Ralph B. Bunje, California Canning Peach Association) (1967).
[ Footnote 18 ] The Senate bill had stated that "the marketing and bargaining position of individual farmers will be adversely affected unless they are free to join together or not join together in cooperative organizations as authorized by law." 113 Cong. Rec. 21410 (1967) (emphasis added).
[ Footnote 19 ] Indeed, throughout the legislative debate on S. 109, an interest in protecting the producer from coercion by either processors or producers was frequently expressed. For example, Representative Poage, Chairman of the House Committee on Agriculture, stated:
[ Footnote 20 ] Appellees attempt to draw an analogy between this case and cases covered by the "state-action exemption" to the federal antitrust laws. Brief for Appellee Agricultural Marketing and Bargaining Board 26-36; Brief for Appellee MACMA 22-31. The state-action exemption, however, is based on an interpretation of the antitrust laws and therefore has no direct application here. See, e. g., Parker v. Brown, 317 U.S. 341 (1943). Moreover, the Michigan Act does not provide for the type of active state involvement in the market that the state-action exemption would require even if it were applicable.
[ Footnote 21 ] Because the Michigan Act is cast in permissive rather than mandatory terms - an association may, but need not, act as exclusive bargaining representative - this is not a case in which it is impossible for an individual to comply with both state and federal law. See Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142 -143 (1963). [467 U.S. 461, 479]