advertise. Section 608c(6)(I) authorizes marketing orders to provide for 'production research [and] marketing research and development projects,' including 'projects... provid[ing] for crediting the pro rata expense assessment obligations of a handler with all or any portion of his direct expenditures for such marketing promotion including paid advertising as may be authorized by the order . . . . The Almond Marketing Order contains regulations, duly promulgated through formal on-the-record rulemaking, which authorize the Almond Board to establish market development projects including paid advertising, 7 C.F.R. § 981.14, to credit a portion of a handler's direct expenditures for market promotion, including paid advertising, for the sale of almonds, and to prescribe appropriate rules and regulations as are necessary to effectively regulate the crediting of the pro rata expense assessment of handlers, 7 C.F.R. § 981.41(c). The regulations do not permit plaintiffs to receive a credit against their annual assessment unless their advertising complies with the regulations regarding creditable advertising, but do not compel plaintiffs to participate in advertising because plaintiffs are otherwise free to engage in any advertising they wish without interference with the Almond Board. As the Department argues, however, the Board is not obligated to subsidize any and all advertising that plaintiffs choose to engage in.

Cal-Almond, Inc. v. U.S. Dept. of Agriculture, No. CV-F-91-122 REC, slip op. at 7 (E.D. Cal. June 3, 1992) (order affirming the decision of the Secretary of Agriculture).

The Ninth Circuit reversed this court's decision in a published opinion. See Cal-Almond, Inc. v. U.S. Dept. of Agriculture, 14 F.3d 429 (9th Cir. 1993). The Ninth Circuit first found that the AMO regulations implicated the plaintiffs' First Amendment rights because they "compelled" the plaintiffs to speak, either by forcing them to subsidize generic advertising, or by forcing them to choose creditable advertising. See id. at 434-436. After finding that the plaintiffs' First Amendment rights were implicated, the Ninth Circuit subjected the regulations to the test announced in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of N. Y., 447 U.S. 557 (1980). The Ninth Circuit concluded that the AMO regulations failed the Central Hudson test because the regulations did not directly advance the USDA's interests in assisting, improving, or promoting the marketing, distribution, and consumption of almonds. See id. at 436-439.

On October 6, 1996, the Supreme Court denied certiorari, see Cal-Almond, Inc. v. U.S. Dept. of Agriculture, 117 S. Ct. 72 (1996), but after the Wileman decision, the Court granted certiorari, vacated the judgment of the Ninth Circuit, and

58 Agric. Dec. 708

instructed the Ninth Circuit to reconsider its decision in light of Wileman. This court received what it thought was the official mandate of the Ninth Circuit instructing it to dismiss the First Amendment claim of the Cal-Almond plaintiffs. This court did so on September 16, 1997. However, this court reconsidered and vacated that order on October 1, 1997, because pursuant to Federal Rule of Appellate Procedure 41 and 42, this court did not have jurisdiction in this matter. The Ninth Circuit on March 24, 1998, issued an order granting the plaintiffs' motion for a stay of mandate until June 1, 1998. On July 22, 1998, the mandate from the Ninth Circuit issued, instructing this court to dismiss the First Amendment claims in Cal-Almond I. The Ninth Circuit cited Wileman in support of its mandate.

Four of the 12 Plaintiffs in this matter, Cal-Almond, Gold Hills Nut Co., Frazier Nut Farms, Inc., and Carlson Farms, are also parties to Cal-Almond I. For that reason, these four plaintiffs are not challenging the "creditable" program.

Although the Ninth Circuit did not issue a published opinion with its mandate, this court believes that it is clear that the Ninth Circuit has found that Wileman bars a First Amendment challenge to the "creditable" advertising program. Because the "creditable" program is legally indistinguishable from the "credit-back" program, as far as the Wileman analysis is concerned, this court concludes that the Ninth Circuit would also find that the Wileman case bars the challenges to the "creditback" program. Accordingly, this court will dismiss the First Amendment challenges to both programs.

IV. Conclusion

In accordance with the foregoing, IT IS ORDERED that Plaintiffs' complaint is DISMISSED. Leave to amend is DENIED, because in the face of a controlling Supreme Court decision, amendment would be futile. The Clerk of the court is directed to enter judgment in favor of Defendant.

MIDWAY FARMS V. UNITED STATES DEPARTMENT OF

AGRICULTURE.

No. 98-16592.

Filed August 24, 1999.

(Cite as 188 F.3d 1136 (9th Cir.))

Raisin order - Handler - Administrative law judge powers.

The United States Court of Appeals for the Ninth Circuit concluded that, where the Raisin Administrative Committee took the position that Midway Farms was a handler and subject to the Raisin Order (7 C.F.R. pt. 989), Midway Farms had standing to file an administrative petition with the Secretary of Agriculture under 7 U.S.C. § 608c(15)(A) despite Midway Farms' position that it was not a handler subject to the Agricultural Marketing Agreement Act. The Ninth Circuit remanded to the Secretary of Agriculture with instructions to rule on the merits of Midway Farms' 15(A) petition and held that, on remand, the administrative law judge has inherent powers to conduct hearings in camera, to allow Midway Farms to submit redacted materials, and to impose protective conditions upon any materials submitted by Midway Farms for in camera review.

UNITED STATES COURT OF APPEALS
NINTH CIRCUIT

Before: REINHARDT, O'SCANNLAIN, and FLETCHER, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

We must decide whether a raisin processor has standing to file an administrative petition under the Agricultural Marketing Agreement Act challenging the Raisin Administrative Committee's determination that it is a "handler" subject to the Federal Raisin Marketing Order.

I

Midway Farms, Inc. (“Midway”) is a California corporation that purchases off-grade raisins and various raisin residue matter that raisin handlers grade out of the raisins intended for human consumption. Midway processes these products into distillery material, cattle feed, and concentrate material. It does not sell

58 Agric. Dec. 714

"raisins" as that term is defined in 7 C.F.R. § 989.5.'

The United States Department of Agriculture (“Department") is responsible for the promulgation and enforcement of the Federal Raisin Marketing Order ("Raisin Marketing Order") pursuant to 7 U.S.C. § 601, et seq. Under the Raisin Marketing Order, raisin handlers must account for the disposition of off-grade raisins, other failing raisins, and raisin residue material. To administer the marketing order regulating the handling of California raisins, see 7 C.F.R. Part 989, the Secretary of Agriculture ("Secretary") established a Raisin Administrative Committee ("Committee”). See id. § 989.26.

On June 13, 1994, the Committee sent Midway a letter requiring it to complete and to submit certain forms because it was a processor and, as such, a “handler" subject to the Raisin Marketing Order. See id. §§ 989.13, 989.15.2 Midway, however, took the position that it was not a raisin "handler" because that term encompasses only “first handlers," and not those who purchase from handlers.' Nevertheless, to avoid possible penalties for non-compliance with the Marketing Order, see 7 U.S.C. § 608c(14), Midway began filling out the forms demanded by the Committee and has continued to comply with the Committee's demands to the present date.

On July 1, 1994, Midway filed an administrative petition with the Secretary

1666 Raisins' means grapes of any variety grown in the area, from which a significant part of the natural moisture has been removed by sun-drying or artificial dehydration, either prior to or after such grapes have been removed from the vines." Id.

'Handler means:

(a) Any processor or packer; (b) any person who places, ships, or continues natural condition raisins in the current of commerce from within the area to any point outside thereof; (c) any person who delivers off-grade raisins, other failing raisins or raisin residual material to other than a packer or other than into any eligible non-normal outlet; or (d) any person who blends raisins: Provided, That blending shall not cause a person not otherwise a handler to be a handler on account of such blending if he is either: (1) A producer who, in his capacity as a producer, blends raisins entirely of his own production in the course of his usual and customary practices of preparing raisins for delivery to processors, packers, or dehydrators; (2) a person who blends raisins after they have been placed in trade channels by a packer with other such raisins in trade channels; or (3) a dehydrator who, in his capacity as a dehydrator, blends raisins entirely of his own manufacture.

7 C.F.R. § 989.15.

'Midway argued alternatively that the Raisin Marketing Order, to the extent it does cover Midway, is contrary to the Agricultural Marketing Agreement Act, 7 U.S.C. § 601, et seq.

pursuant to 7 U.S.C. § 608c(15) (A), seeking a declaration, inter alia, that it is not subject to the Raisin Marketing Order. Midway instituted this proceeding in part because the filing of an administrative petition tolls civil penalties pending its resolution so long as the petition is filed and prosecuted in good faith. See id. § 608c(14)(B). The Department filed a motion to dismiss the petition, arguing that the plain language of section 608c(15)(A) made clear that only a "handler" could file an administrative petition and that Midway did not qualify because it was claiming not to be a handler. Curiously, the Department did not discuss the Committee's determination that it was indeed a “handler" for purposes of the Marketing Order.

The Secretary then subpoenaed various documents from Midway, which in turn provided them with the names of its customers and the sales prices redacted. Fearing that the Secretary's representatives were untrustworthy, Midway refused to provide unredacted documents to the Secretary, explaining that, if the names of its buyers and its sales prices were made public, those from whom it purchased off-grade raisins would contract directly with those to whom it sold, thereby cutting it out as the middleman. The Secretary deemed the redacted documents nonresponsive. Midway then offered to allow the Administrative Law Judge ("ALJ") to review the unredacted documents in camera and specifically agreed to permit the manager of the Committee to look at them. The ALJ initially approved this proposal, but later concluded that he lacked authority to review documents in

camera.

On May 10, 1996, the ALJ dismissed the petition on the basis that Midway could not show that it was a "handler" under section 608c(15)(A). Midway appealed to the Secretary's Judicial Officer, who determined that, because it denied being a handler subject to the Marketing Order, it lacked standing to bring an administrative petition. The Judicial Officer further concluded that the ALJ, in initially agreeing to review documents in camera, erred in giving credence to Midway's claim that the Secretary's agents were untrustworthy and would leak information to Midway's competitors.

Midway subsequently filed a petition for review in the United States District Court of the Eastern District of California pursuant to 7 U.S.C. § 608c(15)(B). It argued that the ALJ and Judicial Officer erred in concluding that it lacked standing to file an administrative petition and also sought a declaration that the ALJ had the authority to review documents in camera.

Midway filed a motion for summary judgment in which it conceded that only a "handler" can file an administrative petition with the Secretary and argued that, for purposes of section 608c(15)(A), it was a “handler" because it was a person "to whom a marketing order is sought to be made applicable." 7 C.F.R. § 900.51. The