Block v. Community Nutrition Institute

RESPONDENT: Community Nutrition Institute
LOCATION: Board of Immigration Appeals

DOCKET NO.: 83-458
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 467 US 340 (1984)
ARGUED: Apr 24, 1984
DECIDED: Jun 04, 1984

Ms. Kathryn A. Oberly - on behalf of the Petitioners
Ronald L. Plesser - on behalf of of the Respondents

Facts of the case


Media for Block v. Community Nutrition Institute

Audio Transcription for Oral Argument - April 24, 1984 in Block v. Community Nutrition Institute

Warren E. Burger:

Ms. Oberly, I think you may proceed when you're ready.

Ms. Kathryn A. Oberly:

Thank you, Mr. Chief Justice, and may it please the Court:

Respondents are three individual consumers who want to buy reconstituted milk, which is milk made from powder and water and occasionally blended with a portion of fresh milk, at a price below the price they would pay for the price of regular fresh milk.

Their complaint is that federal milk market orders issued under the Agricultural Marketing Agreement Act make it uneconomical for milk handlers to manufacture the product they want, and so they're attacking the federal orders.

The issue for this Court is whether ultimate consumers of milk products are proper parties to challenge the minimum wholesale prices that milk handlers are required to pay to farmers.

When this suit was first filed, the three individual consumers were joined by a milk handler and a nutrition organization as co-plaintiffs.

The district court dismissed the entire case, holding that both the organization and the consumers lacked standing, and that the handler had failed to exhaust his administrative remedies under the Agricultural Marketing Agreement Act.

The court of appeals affirmed the dismissal of the handler and the nutrition organization, but it held that the consumers had standing and remanded the case for a trial on the merits.

The milk market order program, as this Court has recognized in a number of prior cases, is extraordinarily complex, and so I will try to limit my description of it to just a layman's description of those provisions of the program that affect the issues in this case.

Probably the most important aspect of milk market orders is the classified pricing system embodied in those orders, and that system has always been a feature of the dairy industry, even before orders came into being in the early 1930s.

Milk... under this system, milk that's used for drinking purposes commands a higher price, known as Class I.

Milk that's made into manufactured products such as cheese or milk powder sells at a lower Class II or Class III price.

The statute requires handlers, who are essentially middlemen, to pay farmers according to the end use to which the raw milk is put.

In other words, if a handler buys milk and sells it for drinking purposes, he pays Class I prices for it.

If he buys the same raw milk and makes it into cheese and sells it as cheese, then he pays Class II or Class III lower prices for it.

But to protect farmers against destructive competition for sales in the desirable fluid market, the handlers' payments are pooled, and farmers get paid a uniform blend price regardless of the use to which the milk of an individual farmer is put.

To maintain the integrity of this classified pricing system, the Secretary of Agriculture regulates, and has since 1964, reconstituted fluid milk as if it were a Class I product.

In other words, if a handler buys powder, then turns around and reconstitutes it into fluid milk, he pays for the powder or the raw milk that he uses to make the powder at Class I prices.

If he uses the powder to make ice cream or some other nondrinking purpose, then he pays for it as a Class II or a Class III product.

Respondents' goal in this case is to let handlers pay for raw milk at the class... the lowest Class III price, even if the handlers turn around and make the powder into fluid milk that competes directly with fresh milk for fluid sales.

As I'll discuss in a moment, we think that Respondents are precluded from litigating what's basically a handlers' grievance about the prices that handlers pay.

First the Court should consider that this lawsuit as a factual matter really makes very little sense.

Ms. Oberly, in that connection why was the handler dismissed?

Ms. Kathryn A. Oberly:

Justice Blackmun, the statute, as I'll explain, has a specific and detailed review procedures... procedure for handlers who wish to challenge a milk market order.

The first step in that procedure is under 608c(15)(A) of the statute.

7 U.S.C. 608c(15)(A) requires a handler to file a petition for review with the Secretary, and the Secretary then holds a formal adjudicatory, on the record hearing, reaches a decision on the handler's petition, and if the handler is dissatisfied, the handler is then afforded a right of judicial review in district court.

The handler in this case did not and has not to this date filed such a petition.

Factually, we are at somewhat of a loss to understand the sense of this case.

As best we can tell, Respondents' complaint, even though they phrased it in terms of price, is simply a matter of convenience.

The potential savings per consumers is negligible.