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WINDHAM CREAMERY, INC. v. FREEMAN

April 28, 1964

WINDHAM CREAMERY, INC., Plaintiff,
v.
Orville L. FREEMAN, Secretary of Agriculture, Defendant



The opinion of the court was delivered by: COOLAHAN

Both plaintiff and defendant filed cross motions for summary judgment in the above captioned matter. Extensive briefs were submitted and oral argument had at which time the Court took the matter under advisement for further study of the material submitted and to review the voluminous record of the proceedings before the Secretary.

The plaintiff, Windham, brings this action under the provisions of 7 U.S.C.A. § 608c(15)(B) known as the Agricultural Marketing Agreement Act of 1937 (7 U.S.C.A. § 601 et seq). Windham complains that the provisions of Milk Marketing Order No. 27 (now known as No. 2) are illegal and that the provisions of that order are arbitrary and produce a discriminatory result on the plaintiff. The provisions of Order No. 27 herein involved are Section 927.37 headed Classes of Utilization (7 C.F.R. 927.37). Subsections (c) and (d)(1) of this Section are the provisions which plaintiff claims are invalid and beyond the powers of the agency to promulgate. The plaintiff filed a written petition pursuant to 7 U.S.C.A. § 608c(15)(A) with the Secretary of Agriculture and a hearing was held before that body. Exceptions were filed to a report and a recommended order made by the Examiner. This report and order, however, was affirmed by the written opinion of the Judicial Officer. A petition for rehearing, reargument and reconsideration was filed by the plaintiff and denied. As a result of the denial of the relief sought by the plaintiff it now brings this action after fully exhausting the administrative remedies available.

 The record of the proceedings below has been filed with this Court and the parties are in accord as to the facts encompassing the controversy in question. Therefore, the summary judgment apparatus is appropriately invoked in this case. See Wawa Dairy Farms v. Wickard, 149 F.2d 860 (3rd Cir. 1945).

 Review of this matter by the District Court is limited to proceedings inquiring whether substantial evidence supports the Secretary's findings and such review is in no way a trial de novo. See Federal Security Administrator v. Quaker Oats Co., 318 U.S. 218, 63 S. Ct. 589, 87 L. Ed. 724 (1943) and Queensboro Farm Products, Inc. v. Wickard, 137 F.2d 969, 980 (2nd Cir. 1943). Consequently it is incumbent upon this Court to consider arguments of counsel in relation to the opinion of the Judicial Officer as such may be supported in the record of the proceedings before the Administrative Body.

 The plaintiff is a corporation of the State of New York and is admittedly a handler subject to the regulation order No. 27. It is a wholly owned subsidiary of Farm Lands, Inc., which is located in Fair Lawn, New Jersey. Windham operated a pool plant in Windham, New York and shipped raw milk to the plant in Fair Lawn. After processing, the milk products were delivered to steamships docked in New York. Other deliveries were made to ships moored on the New Jersey side of the Hudson River but owned by the same company as the New York vessels. All purchases for the ships, regardless of their port, were made through the shipping company office at Hoboken, N.J. The milk in question was to be used for commissary purposes aboard the ships while at sea. Said consumption was to be by the passengers in the ordinary course of dining while on board ship. The purchaser in question was the American Export Lines, Inc. The largest ships of these lines sail from New York while twenty smaller combined freight and passenger vessels sail from Hoboken, N.J. The milk purchased was all identically packaged and all of identical quality. None of the milk was utilized until the ships were out of sight of Port.

 In auditing the milk utilization reports, the Market Administrator determined that the classification of the fluid cream transported to the Hoboken piers would be Class III while the classification of the fluid cream (of identical quality and character) delivered in New York would be Class II, since under the aforestated provision milk delivered to a plant or purchaser outside the New York-Metropolitan District was to be placed in a different and lower price classification. The plaintiff reported all of the milk delivered at the lower classification, but the Market Administrator reclassified some of the milk to the higher Class II category based on the fact that said milk was delivered to a purchaser within the New York metropolitan district (the ships docked in New York) thus requiring the plaintiff to pay an additional amount into the pool which has since totaled approximately $ 36,000.00 on all such shipments under the foregoing order.

 The plaintiff contends that the order differentiating between Class II and Class III milk is illegal inasmuch as it exceeds the power of the Secretary under the statute and is therefore arbitrary and unenforceable. Plaintiff further contends that the milk in question was in the stream of foreign commerce and hence not subject to the power of the Secretary.

 The defendant vigorously disputes both of these contentions and argues that the record below amply justifies both the promulgation of the order and the application to the plaintiff of said order in this situation.

 The pertinent portions of Order No. 27 involved in this case are as follows:

 ' § 927.37 Classes of utilization. Subject to all of the conditions set forth in Secs. 927.30 through 927.36 milk shall be classified at the plant at which classification is to be determined as follows:

 '(c) Class II milk shall be all milk the butterfat from which leaves or is on hand at the plant in the form of cream, sweet or sour, half and half, fluid cream products, or in the form of cultured or flavored milk drinks, containing less than 3.0 percent or more than 5.0 percent of butterfat, unless such cream, half and half, fluid cream products, or cultured or flavored milk drinks are established to have been so handled or marketed as to classify such milk in some other class named in this section.

 '(d) Class III milk shall be all milk which meets the conditions set forth in any one of the ...


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