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MICHIGAN CANNERS & FREEZERS ASSOCIATION v. AGRICULTURAL MARKETING AND BARGAINING BOARD ET AL.

SUPREME COURT OF THE UNITED STATES


decided: June 11, 1984.

MICHIGAN CANNERS & FREEZERS ASSOCIATION, INC., ET AL
v.
AGRICULTURAL MARKETING AND BARGAINING BOARD ET AL.

APPEAL FROM THE SUPREME COURT OF MICHIGAN.

Brennan, J., delivered the opinion for a unanimous Court.

Author: Brennan

[ 467 U.S. Page 463]

 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 Mich. 706, 332 N. W. 2d 134 (1982).

[ 467 U.S. Page 464]

     We noted probable jurisdiction, 464 U.S. 912 (1983), and now reverse.

I

A

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*fn1 of agricultural commodities to join cooperative associations through which to market their products.*fn2 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. Page 465]

     defined to include both processors and producers' associations*fn3 -- 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."*fn4

[ 467 U.S. Page 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).*fn5 When the

[ 467 U.S. Page 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. Page 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).*fn6 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.

B

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.*fn7 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,*fn8 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. Page 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.

II

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).*fn9 And, as this Court has recognized,

[ 467 U.S. Page 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.*fn10

A

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. Page 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.

B

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. Page 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.*fn11 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.*fn12 Third, witnesses testified that a prohibition on interference by producers' associations would promote competition on the merits among associations seeking membership.*fn13 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' associations were permitted substantially to diminish the ranks of the independent producer.*fn14 Finally, witnesses testified that the producer's right to remain independent of an association was simply "a basic American right" deserving of protection.*fn15

[ 467 U.S. Page 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:

" It shall be unlawful for any handler or association of producers knowingly to engage . . . in the following practices:

"(a) 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 . . . ; or

"(c) To coerce or intimidate any producer or other person to enter into [or] maintain. . . a membership agreement or

[ 467 U.S. Page 474]

     marketing contract with an association of producers or a contract with a handler. . . ." Ibid. (emphasis added).*fn16

The Senate Report explaining these provisions of the bill stated:

"The objective of the bill is to protect the producer in the exercise of a free choice. Many witnesses suggested that the bill did not fully accomplish this purpose, because it protected the producer only from improper pressure not to join an association. To protect his free choice he should also be protected from improper pressure in the other direction, that is, improper pressure to join an association. The committee did not have before it any testimony to indicate that producers were being subjected to any improper pressure to join associations, but was convinced by the logic of the situation that if the objective is to protect the producer and afford him a free choice, the bill should protect him from pressure in either direction." S. Rep. No. 474, 90th Cong., 1st Sess., 5 (1967).

Similarly, when Senator Aiken introduced the bill on the floor of the Senate, he stated that the bill "is designed to protect the agricultural producer's right to decide, free from improper pressures, whether or not he wishes to belong to a marketing or bargaining association." 113 Cong. Rec. 21411 (1967).

[ 467 U.S. Page 475]

     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.*fn17 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).*fn18 In so doing, however, the House indicated that it did not intend to alter the substance of the bill. Representative Sisk explained:

"Since the bill already makes clear that associations of producers are not excluded from the term 'handler,' the phrase ['association of producers' in the prohibited-practices section] is redundant and could be misconstrued as unfairly pointing the finger of accusation to associations of producers. This is not the intent; and while my amendments do not change the purpose or basic meaning of the bill, they make misinterpretation more difficult." Id., at 7464.

[ 467 U.S. Page 476]

     Similarly, in reference to the proposed amendment, Representative Latta stated that "I want the record to clearly show that our farmers under the present language of this bill . . . have the right not to join these associations if they so choose." Id., at 7449. In response to Representative Latta, Representative Poage, Chairman of the House Committee on Agriculture, stated:

"It was clearly the opinion of the entire committee that there was not any intention or desire to give anybody the right to discriminate against anybody else because of his failure to join any of these associations.

"I cannot see that the amendments do anything more than to make the matter read a little differently and a little more satisfactorily, to certain groups, without changing in one iota, so far as I can see, the legal effect of the legislation.

"I do not think taking out the words in numerous places -- 'associations of producers' -- will in anywise change the legal effect." Id., at 7449-7450.

Finally, highlighting its intent to prohibit coerced affiliation with associations, the House amended the definition of the term "handler" to include any association "contracting or negotiating contracts or other arrangements, written or oral, with or on behalf of producers or associations of producers." Id., at 7465, 7469 (emphasis added).*fn19

[ 467 U.S. Page 477]

     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.

C

The Michigan Supreme Court held that "[while] § 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. Page 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).*fn20 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.*fn21 To that extent, therefore, the Michigan Act is pre-empted by the AFPA, and the judgment of the Supreme Court of Michigan is reversed.

It is so ordered.

Disposition

416 Mich. 706, 332 N. W. 2d 134, reversed.

Counsel FOOTNOTES

* 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.


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