High court rules against raisin board in dispute over setting aside crops to prop up prices

Striking down one of the last New Deal-era farm programs, the Supreme Court has sided with a California raisin grower in his decade-long legal battle over a federal raisin board's seizure of his crop to reduce supply and prop up prices.

In an 8-1 decision Monday, the court ruled that Marvin Horne must be paid in full for his crop — a decision that bolstered free markets and property rights and could potentially crimp other government regulation of business.

It struck down as unconstitutional one of the last farm programs, spawned in the Great Depression, that had allowed growers to band together with the support of government to keep prices steady.

California produces 99% of the nation's raisins. In years when the market was glutted, the Raisin Administrative Committee would set aside part of the crop and keep it off the open market. Those extra raisins were then sold overseas or were given to the school lunch program.

The raisin board, overseen by the U.S. Department of Agriculture, has not used that authority in recent years as raisin acreage has declined.

In theory, all the growers benefit from the higher market prices. But Horne, a grower from Kerman, near Fresno, objected and accused the board of "stealing his crop" in two years when more than 30% of the crop was set aside. He was fined more than $680,000 by the USDA for violating marketing orders in 2003 and 2004.

He sued, alleging this scheme violated the 5th Amendment, which says private property may not be taken for public use without just compensation.

The high court agreed in Horne vs. USDA. Although most cases about taking property have involved real estate, the principle applies to raisins as well, the court said.

"The government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home," said Chief Justice John G. Roberts for the court.

Treating a regulatory program as a taking of personal property could prove more broadly significant.

In the past, the justices have said government has broad authority to regulate property and businesses. For example, a zoning law may limit owners in developing their land.

But the court has said land-use regulations go too far when they deprive the owner of all use of the property. In the raisin case, the court said that physically depriving the grower of part of his crop violated the 5th Amendment.

Roberts described the raisin board's order as "a clear physical taking," not just a regulation.

"Actual raisins are transferred from the growers to the government. Title to the raisins passed to the Raisin Committee," he said. "The government has broad powers, but the means it uses to achieve its end must be consistent with the letter and spirit of the Constitution."

Property rights advocates said the ruling will have a national impact. The court "is showing more willingness to put real teeth in the Takings Clause of the 5th Amendment," said Richard Samp, counsel for the Washington Legal Foundation.

"Without strict enforcement, government officials are all too eager to take private property without providing just compensation," he said.

Whether the court would be willing to extend the legal principle to cover cases of regulations that don't involve physical taking of property remains unknown.

It is also not clear whether the ruling will affect other farm products. A USDA official would say only that the department was "reviewing the Supreme Court ruling" and "will provide guidance based on the decision in the near future."

Earlier, government lawyers told the court the raisin board was unusual because it enforced orders to keep raisins off the market. Only a farm program involving tart cherries worked the same way, they said.

In his opinion, Roberts said Horne does not have to pay the fines and penalties assessed by the USDA. Justices Antonin Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel Alito agreed in full with Roberts.

Justices Stephen Breyer, Ruth Bader Ginsburg and Elena Kagan agreed the taking of the raisins was unconstitutional, but they would have sent the case back to a judge in California to calculate the proper compensation.

Horne benefited from the higher prices for the raisins he sold, Breyer noted, and that should offset some of what he is owed.

Justice Sonia Sotomayor dissented alone, agreeing with the government that the raisin orders were regulations of the market. They may be "outdated and by some lights downright silly," she said, but they do not deprive the grower of all use of his property.

Horne said he was "astounded" by his victory.

"It's been 11 years, and a lot of water over the dam," he said. The government and industry "made a lot of accusations and they did a lot of dirty tricks. They have to live with what they've done, not me.... They really went after us these last few years. It just was dirty pool."

Barry Kriebel, president of Sun-Maid Growers, a cooperative of 750 raisin grape growers that opposed Horne in the case, said the industry has moved away from using reserve pools for the last five years or so. He expects little new effect on the price of raisins, which has been somewhat volatile without the reserve pool in place.

"I don't really see it having any significant effect," Kriebel said. "We haven't used any of these reserve pools for a long time."

Raisin grape acreage has decreased, he said, replaced either with other types of grapes or by almonds and other nuts.

Over the last three years, the amount of mature raisin-grape acreage declined 5% statewide, while younger vineyards that aren't bearing fruit yet plummeted 33%, according to the USDA.

Last year, overall, 928,000 acres were planted with raisin grapes in California, of which 865,000 were bearing vines, according to the USDA.

There was no love lost with Horne over the case, however.

"He kind of thumbed his nose at the industry for a long time," Kriebel said. "I'm not disappointed that the reserve pools are gone. I'm just disappointed that somebody that doesn't abide with the system gets a free ride.

"I'd have no complaint whatsoever if he had complied and actually had participated in industry meetings," he said. "It's kind of hard to complain about what the industry is doing if you never show up at an industry meeting."

david.savage@latimes.com

Times staff writer Geoffrey Mohan in Los Angeles contributed to this report.

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