HUNT v. WASH. STATE APPLE AD. COMM.
In 1972, the North Carolina Board of Agriculture adopted a regulation that required all apples shipped into the state in closed containers to display the USDA grade or nothing at all. Washington State growers(whose standards are higher than the USDA) challenged the regulation as an unreasonable burden to interstate commerce. North Carolina stated it was a valid exercise of its police powers to create "uniformity" to protect its citizenry from "fraud and deception."
Did the North Carolina regulation violate the Commerce Clause by placing an unreasonable burden on interstate commerce?
Legal provision: Article 1, Section 8, Paragraph 3: Interstate Commerce Clause
The Court voted unanimously that the North Carolina regulation was an unconstitutional exercise of the state's power over interstate commerce. Although the regulation was facially neutral, it had a discriminatory impact on the Washington growers while shielding the local growers from the same burden. The regulation removed the competitive advantage gained by the Washington apples from stricter inspection standards. The regulation produced a leveling effect that works to the local advantage by "downgrading" apples from other states unjustly. Therefore, the regulation places an unreasonable burden on interstate commerce.
Argument of John R. Jordan, Jr.
Chief Justice Warren E. Burger: Before we call in first case today I would like to announce that Mr. Justice Rehnquist is inevitably absent due to an illness that reserves the right to participate in consideration and decision on the basis of the record of the case and the tape-recording of the oral argument.
We will here argument first this morning in 76-63 Hunt, the Governor of North Carolina against Washington State Apple Advertising Commission.
John R. Jordan, Jr.: Mr. Chief Justice and may it please the Court.
In 1971, State of North Carolina enacted a general statute requiring that no grade other than applicable U.S. grade to be shown on closed containers of apples sold of offered to sale in North Carolina.
In 1973, the statute was amended to include the words or shipped, an amendment which was probably not necessary but to make a material amendment making the U.S. grade the exclusive grade marking on closed containers.
The statute has, at all times both in 1971 and in 1973, applied to apples grown within North Carolina as well as apples grown elsewhere and furthermore there has never at any time in any prohibition on the labeling of apple containers so as to state that they were grown in Washington or in any other jurisdiction.
May we quickly explain that apples are graded by the use of terms of its extra fancy, fancy, number one and so forth.
These grades can be arbitrarily changed from year to year by various agencies of the 13 commercial apple growing states.
Apparently this is sometimes done to create a market for a particular quality of apple.
Indeed the Washington State direct their marketing as this power and has changed the Washington State grades since this controversy begin.
Thus, what was a fancy apple last year may not be this year, although the name is the same.
The General Assembly of North Carolina exercised the police power of the State to prevent confusion in the wholesale marketplace where apples are sold in closed containers and not available for a ready viewing by a professional apple purchaser.
Unknown Speaker: Is your State of North Carolina one of the 13 states that commercially produce apples?
John R. Jordan, Jr.: Yes, it is Your Honor.
Unknown Speaker: Would it be true that apples produced in your state and sold to wholesalers in your state would not be in closed containers?
John R. Jordan, Jr.: Not necessarily, sir.
I believe that the practice in North Carolina is the same as the practice in Washington, some are sold in closed containers intrastate and some are not.
Unknown Speaker: But all apples imported into North Carolina from Washington and sold to wholesalers in North Carolina would be in closed containers?
John R. Jordan, Jr.: Yes, Your Honor.
Now, by use of the U.S. grade only there can be no arbitrarily manipulation of labels between fancy and extra fancy whether by North Carolina or by any other jurisdiction.
The federal grades are the only uniform and consistent grades.
The Washington State Apple Advertising Commission filed a suit for declaratory judgment that the statute is unconstitutional and prayed that enforcement be permanently enjoined.
A Three-Judge District Court sitting in North Carolina held that the statute contravene the Commerce Clause and enjoined its enforcement insofar as it precluded the display of the Washington State grade on the containers, but it did not strike down the requirement of the North Carolina statute that the U.S. grades must be shown, and the Court will recall, as I indicated the moment ago, that that goes all away back to the 1971 enactment, the original enactment rather General Assembly.
Three questions are presented by the appeal.
They are the standing of Washington State Commission to bring this action, the jurisdictional amount, and the District Court’s determination that the North Carolina statute contravenes the Commerce Clause.
May it please the Court, we would like to briefly address each of those and first to address the threshold questions of standing and the jurisdictional amount requirement.
We will respectfully submit that the Advertising Commission’s pleadings do not contain the necessary allegations of injury in fact to an established standard.
Rather the complaint alleges and injury to individuals who are not parties to this action.
I will come to the action in a representative capacity in a moment.
At this time, may it please the Court, I am talking about an action by the Commission for itself.
Now, the claim is an advertising activity.
It's interesting to note that there is a self-serving portion of the statute creating the Advertising Commission, and it is said out in the opinions, elaborately stating that it was enacted within the police power of the State of Washington, the very thing which is before us ultimately under the Commerce Clause when we test a North Carolina statute.
Unknown Speaker: Would you agree that the Washington Commission performs substantially the functions of the traditional trade association of growers or manufacturers.
John R. Jordan, Jr.: No sir, we respectfully disagree.
Unknown Speaker: Do you think the District Court’s reference in the opinion to the association was Freudian slip then?
John R. Jordan, Jr.: May it please Your Honor, I believe that the District Court misread the Warth case and others because, there we were referring to associations.
This is not an association.
Unknown Speaker: This is a State Governmental agency, isn’t it?
John R. Jordan, Jr.: That is exactly what it is, may it please the Court.
Not a single grower in the State of Washington has any option about this matter whatsoever.
He is assessed and he pays and the Commission then spends his money to advertise his apples.
He cannot refuse to join, may it please Your Honor.
He is an individual who pays the Commission to do this but there is nothing which disqualifies him, if he is injured by the North Carolina statute from bringing an action.
Certainly if his injury exceeds $10,000, he could bring it in the Federal Court, if it does not, he could bring it in the State Court.
Unknown Speaker: But would you say that this state agency does not perform substantially the same functions as trade association?
John R. Jordan, Jr.: Your Honor, I would say it does not.
Its principal function is advertising and if you would look at the complaint, even in its amended form with the second bite at the cherry.
All that Washington State contends that the Washington State Advertising Commission does in the State of North Carolina is advertising.
They say we spend $25,000 in advertising.
Well there is nothing in the North Carolina statute which says you cannot advertise.
Every carton coming into North Carolina can display in the largest possible word it, “Washington State Apples”, and indeed at hearings before the North Carolina Advertising Commission, we showed that, that was being done and we have no objection to it.
We welcome that advertising that they were grown in Washington.
What we are saying through is to put the Washington State grade on the carton, on their closed containers is offensive to the North Carolina statute because within the police power the General Assembly of North Carolina found that there was confusion in the marketplace.
Unknown Speaker: But you are talking about standing, aren’t you?
John R. Jordan, Jr.: Your honor, I am.
I am getting ahead, if I may return to my notes.
The Linda case in 1973 which is cited to this Court so often, reaffirmed the requirement that a party seeking review must itself have suffered an injury and when the constitutionality of a statute is attacked, then the party invoking jurisdictional power must show that it has sustained direct injury as a result of the statute enforcement.
There, both the Sierra Club case and the Warth case say that it must appear in the complaint.
Unknown Speaker: Mr. Jordan, excuse me.
Would you say that the plaintiffs would have standing if the statute said there should be no advertising on the containers?
John R. Jordan, Jr.: There we run into a question, of course, of commercial freedom of speech which we do not think is relevant in this case because we do not say that you do not --
Unknown Speaker: No, I am asking if the statute said that do you think the plaintiffs in this case would have standing.
John R. Jordan, Jr.: That plaintiff would have standing.
Unknown Speaker: But, isn’t this statute similar to that, that it limits the kind of advertising that can go on the containers, rather to say it you may not advertise the Washington grade on the containers?
John R. Jordan, Jr.: I think I would follow Your Honor’s thinking in that, and that Judge Dupree (ph) sitting alone and passing on the jurisdictional questions that on our own request.
We filed a letter with him, asking him if he would do that sitting alone before the Three-Judge panel was convened, Judge Dupree referred to commercial advertising in saying that the Commission had this right to advertise, but of course, looking again to the two recent Virginia cases before this Court on commercial advertising, they do not say that you can’t regulate.
Here, all we are saying is that you may advertise where your Apples came from, but you can’t confuse the wholesaler or purchaser by having multiple grades.
Unknown Speaker: What you are saying in affect is that putting the grades and the labeled is not a legitimate form of advertising, and if you say that, haven’t you conceded standing?
That’s what I understand.
John R. Jordan, Jr.: Only to this extent that if other advertising is permitted then the degree of advertising which is the degree test which is applied to commercial advertising under that First Amendment is met.
As we say, they can put any kind of identification in the world.
This is definitely, if please the Court, from the Arizona case in which the Court held that Arizona could not require that the name “Arizona Produced” appear on the cantaloupe carton.
Unknown Speaker: Mr. Jordan, can you explain to me, why the Court of Appeals did not discuss the standing point other than to say that it had been decided?
John R. Jordan, Jr.: May it please Your Honor, the Court of Appeals directed us or rather the Three-Judge District Court directed us to go directly into the arguments on the merits stating that it was accepting the Memorandum and order of Judge Dupree who heard it alone.
Unknown Speaker: So, it was not discussed?
John R. Jordan, Jr.: It was not discussed before the Three-Judge Panel, yes.
Now, I would like to move very quickly to whoever the Commission may bring it in a representative capacity because obviously that is the next hurdle that we must cross.
Now, we say, it cannot, as I have indicated a moment ago to the Chief Justice, because this is not an association within the sense of a single association case that has been before this Court, not one that we can find, and I hope I am not mistaking the situation.
Unknown Speaker: Suppose instead of designating this Commission, the Legislature of Washington had used the word “Association” spoken in terms of membership.
Would your view be the same because of the alleged exercise of police power?
John R. Jordan, Jr.: May it please the Court, I would look still to the nature of the organization, and when we look at the nature of this organization as set forth in the Appendix we seek what its function really is, and that is to access the apple growers and obtain moneys to advertise apple, and to do research into improving the growing of the apples in the State of Washington which is admittedly a major crop there.
Unknown Speaker: What do trade associations do that this Commission does not do?
John R. Jordan, Jr.: Trade associations, may it please Your Honor, first and I think the distinguishing characteristic is trade associations are voluntary organizations Which --
Chief Justice Warren E. Burger: A union is still a union even if the people are compelled to join it, is it not?
John R. Jordan, Jr.: Yes it is Your Honor, but we think It --
Chief Justice Warren E. Burger: Why it is the compulsion or dispositive factor in your mind?
John R. Jordan, Jr.: Because there is no option on the part of the members in a controversies of this kind where there is no option on the part of the members as to whether they wish to participate or not.
There is an option certain as to whether person wants to belong to a union or not.
Here, if you are go be an apple grower in the State of Washington you are going to belong that this advertising agency whether you want to or not.
Unknown Speaker: I did not think it was a matter of belonging, I thought it was a matter of having a burden accessed in sort of a quasi tax by governmental agency.
I did not know this council had members.
John R. Jordan, Jr.: This Advertising Commission has representative from the growing and Warehousing segments of the apple industry in the State of Washington, may I please the Court, and they are elected by the districts according to the Washington Statute as it appears in the Appendix.
Unknown Speaker: But growers do not belong to this, there is simply tax to support it, isn’t it?
John R. Jordan, Jr.: That is right.
That is correct.
Unknown Speaker: Perhaps your use of the term “belonging” was the same kind of a Freudian slip as the District Court may refer to the association.
John R. Jordan, Jr.: Perhaps so Your Honor, but we also think there is another distinction here and that is one which this Court has pointed out in other cases that is no disability on a single one of these growers from bringing an action if indeed it is injured.
Now, I know there is affidavit in here and this brings the Warth case.
There is an affidavit in here in which the Director of Marketing of Apples of the State of Washington says that he owns an orchard, but it is significant that he never says he has been injured whatsoever by the North Carolina Statute.
Surely, if he had been injured he would have said so.
In the Warth case the opinion points out that there was one member of the council who actually pleaded that he had been injured.
But still this Court said one is not enough to make the council the proper party in that case.
The Court did not go along with the court below.
Now, I would like to point out that because it is very important part of this case, Mr. Bramley’s (ph) affidavit on Pages 103, 107 of the Appendix inadvertently misstates the genesis of the North Carolina law.
Now, actually it was passed in 1971, two years before this controversy began, not in response to the appearance of the Washington State Apple Advertising Commission before the North Carolina Board of Agriculture.
It was in 1973 that the change was made because of the constant and persistent refusal of the State of Washington to obey the law.
Every other apple growing state shipping into North Carolina was obeying the law.
Then, so the 1973 session of the State added the words that it would be the exclusive marking whether they were North Carolina apples, Washington apples, Virginia apples and of course, we have no greater competitor in North Carolina than these delicious Virginia apples.
But North Carolina did not change the rules after the controversy began.
No, indeed, but Washington did.
It went in and changed its grades and up them to the equivalent Unites States grades.
Now, the harsh fact is that should they prevail here today, they can go back to Washington and change those, lower those grades, change them back to what they were before.
Unknown Speaker: You have not left a question of standing, have you?
John R. Jordan, Jr.: Yes.
I would like to talk just a word on jurisdictional on that.
Unknown Speaker: You did not mention Parens Patriae as a theory?
John R. Jordan, Jr.: No sir, I don’t, I have not covered it any of our briefs either presently.
On jurisdictional amount the only specific allegation in the complaint, and again, I refer to the insistence of this Court that this would be determined from the allegations in the complaint.
This is again in Sierra Club; this is in Warth, and the only thing you find out is the $25,000 spent on behalf of the commission in advertising in the State of North Carolina.
Well, they are welcome to continue to advertise in the State of North Carolina.
There is no prohibition on that.
So, they have to then go to the question of aggregation of claims.
We find no case precisely in point and that is not surprising but there are analogous cases, the Zahn case which we cite involves four property owners claiming injury by water pollution caused by paper company, and in this Court here that claims could not be aggregated to provide the $10,000 you see.
If that is true, every single marketing association in North Carolina could have ten growers coming into the Federal Courts, I say, in North Carolina.
In the nation and there must be tens of thousands of them coming into the Federal Courts and in saying, “I am injured, $1,000.”
Ten of them, that’s $10,000.
These are matters which this Court has persistently said should be treated in the State Court.
There is an interesting contradiction in what the District Court did in this regard.
The Bramley affidavit, which appears on Page 17 of the Appendix, attempts to meet the jurisdictional requirement which was not in the complaint.
It is just not there, but they say that the requirement -- they estimate that it costs from 5 to 15 cents a box to obliterate the Washington State grade from what they allege a pre-printed container.
Now, the evidence is in dispute on that.
There is an affidavit to the contrary there as to whether they are all pre-printed or not.
But in any event the District Court accepted this and Mr. Justice Marshall it was referred to by Judge Dupree and Judge Craven who wrote for the Three-Judge Court specifically put it in his Footnote 9 in great details.
Obviously the Court felt that this was the basis for the jurisdictional amount, but what did the Court do.
The Court struck down the requirement which put the Washington growers to this expense what left intact the requirement that they show the U.S. grade that mathematically obviously one cancels out the other and you are left with a zero.
Now, our point Is that if you cannot aggregate there is absolutely no way to reach the jurisdictional point, the jurisdictional amount in a representative capacity.
May I speak very quickly on the merits, I would like to remind the Court that less than 1% of the Washington production is involved -- less than 1% of the Washington apples shipped involved in this case, and that must be considerably less then 1% of the total production. Now, that is the backdrop for the exercise or the application of the balancing theory.
Now, there was the case in the 30’s Justice Brandeis speaking for the Court held that if was proper for Oregon to request standard containers for raspberries and strawberries.
Obviously, the state shippers were required to go to the expense of using a different container from that permitted by other state than Oregon.
MR. Justice Brandeis pointed out, and let me say with candid, he distinguished, he used some language which distinguished that opinion from the opinion that we seek in this case, because he said that the plaintiff was a manufacturer of grapes, it was not a grower nor produce, there is that difference.
He went on to say that actually probably in a state commerce is got involved because the real crux of what we are talking about here is intrastate.
But Mr. Justice Brandeis went on the point at one factual that comes home in this case.
He said “There are 34 other styles or shapes of berry baskets in use somewhere in the United States.
Obviously a multitude of shapes and sizes of packages tends to confuse the buyers.”
And then he specifically applied the police power test to that kind of factual situation and he said the order here in question deals with a subject clearly within the scope of the police power when such legislative action is called in question if any state of facts reasonably can be conceived that would sustain it there is a presumption of existence of that state of facts and one who assails in the classification must carry the burden of showing by resort the common knowledge or other matters which may be judicially noticed or other legitimate proof that the action is arbitrate.
This record shows the country.
This record shows that since the North Carolina statute was passed, the qualities of apples coming into North Carolina have improved.
This record shows that United States Department of Agriculture conducting an independent survey of the apple industry from one ocean to the other found that what North Carolina had done had had a salutary effect and recommended that every apple growing state do the same thing.
The General Assembly of North Carolina hearing witnesses from the apple industry enacted the statute within the exercise of its police power.
There is an affidavit in this Appendix from a gentleman whose name, if I recall is Barba (ph) who has been in the apple business for 50 years.
He pointed out that the use of multiple grades was not only confined to what appears on the container, on the close container but that apples are sold by pricelist which are circulated, I believe, by telegram or by wire or electronically in some way, and that when all of these different grades appear on that list, and that when multiple grades and a federal interstate grade both appear on that list, it is confusing to the buyers and that prices are depressed in this way.
Now, it has been chosen that in North Carolina the grower that since 1971 have been using the United States grade only.
That has improved the quality of domestic apples.
That is in this record.
What it seeks to do in that time, and no other state significantly raises any protest.
Every other apple growing state has acquiesced in what North Carolina is trying to do.
It is contended by a State of Washington that this statue discriminates in favor of North Carolina growers.
But nowhere, nowhere in the record or in the brief, we have shown how on earth does it discriminate in favor of North Carolina growers.
Unknown Speaker: Mr. Jordan, does North Carolina provide a state grading system to apples?
John R. Jordan, Jr.: It uses, by statue -- may it please Your Honor, the federal grades however the statue provides that you need not grade if you do not wish to where you use a closed container, and of course that also applies to Washington or any other state, shipping in the North Carolina.
I believe the same is true for Virginia.
Unknown Speaker: Does that mean that box containing the apples is not required to have any grade at all?
John R. Jordan, Jr.: Yes, Your Honor that is true and that seem to bother Judge Craven.
Unknown Speaker: Well, may I follow that up?
How does it solve the purpose of informing the market as to the grades of apples if the container may contain no grade at all?
John R. Jordan, Jr.: We have this situation when apples come in, in a closed container -- and this has been agreed by all parties, this was agreed in oral argument before the Three-Judge Court that we are really talking about apple transactions at the wholesale level, where you have got experts, men who spent their lives like Mr. Barba (ph) who spent 50 years buying and selling apples.
Men who look at apples and determine visually what that apple is worth, but when an apple is sold in a closed container whether it is grown in Washington or in North Carolina and when it is bought or sold from one of these pricelist which transferred either electronically or by telegram or mail, you go back whether it says it is on fancy, on extra fancy, on ordinary, a U.S. or Washington one or what.
But the professional buyer knows by the grade that this is going to call for the best price, this is going to be the best grade.
If there is no grade then that is an apple that is going to be used for applesauce or vinegar or cider whatever the other uses for apple are.
This is known within the trade, this is trade custom.
It is where they are available for visible determination that no grade is really necessary.
It is where they are marked in a closed container that the buyer has to have something to guide and if there is nothing on it whatsoever then the buyer knows he is not in the fancy, the extra fancy, the number one category anyway.
Of course he has a right and it is exercised to open that container look at those apples and give them a manual visible inspection.
Unknown Speaker: Mr. Jordan, the statute does not prohibit the use of the various grades for the purpose of quoting prices or recording prices or anything like that, does it?
John R. Jordan, Jr.: No it does not; it just refers to that presence on closed containers.
I think my time is up.
I would like to sum up with just one word.
We feel that ultimately the principle thrust of the Apple Commission’s position is that the North Carolina statute does not meet the balance of interest test, that is, that for a state regulation to be constitutional its benefits must outweigh the burden on it and the state commerce.
In this context the whole core of this case can be considerably restricted.
It boils down that whether the desire of a given state to advertise its state grade on less than 1% of its total volume of apple shipped outweighs the exercise of the police power of the State of North Carolina through its General Assembly, when the records shows that while the statute was in effect the quality of apple shipped in the North Carolina improved, the confusion was eliminated, and that the State’s action received a laudatory recommendation of experts surveying such matters for the US Department Of Agriculture.
When the balancing test is applied to these facts we respectfully submit that the action of the General Assembly should prevail.
I thank you so much.
Chief Justice Warren E. Burger: Very well Mr. Jordon.
Argument of Slade Gorton
Mr. Gorton: Mr. Chief Justice and may it please the Court.
The production and sale of apples has played a major role in the economy of the State of Washington for many decades.
As a result the State itself has shown a considerable interest in the apple business.
Some 60 years ago Washington was the first jurisdiction in the United States to promulgate apple grades, anticipating the federal grading system by some 15 years, but there are several even more vital distinctions between the two grading systems.
The federal system is optional only.
The apple packer may choose to use it or to ignore it without penalty.
The Washington state system on the other hand is mandatory.
No apples maybe packed or shipped in or from the State of Washington unless they have been graded and unless the grade is marked on the container.
The federal grading system permits and packer himself to grade his own apples, subject only to someone’s later challenge.
The Washington state system on the other hand mandates grading by independently employed inspectors.
In summary, the federal system requires neither grading nor inspection.
The Washington state system requires both.
The US Department of Agriculture therefore has explicitly declined to preempt the field of apple grading or inspection and no issue of preemption is involved in this case whatsoever.
While some 36 states, not 13 Mr. Justice Stewart, grow apples in commercial quantities, 30% of all of the apples grown in the United States are grown in Washington and the 50% of all fresh apples sold in interstate commerce in closed containers originate in the State of Washington, in fact, on one relatively small portion of the state, on the East Slope of the Cascade Mountains.
As a result of this combination of facts, a number of developments in the apple business were either illogical or almost inevitable or both.
In our State one such development was a detailed and careful state regulation of the apple business to ensure the quality and the reputation of Washington apples.
That regulation includes our mandatory grading and inspection system and a state grading system, which is more rigorous with the top Washington grades, extra fancy and fancy, deny the comparable voluntary federal grades.
In addition, Washington is the only state in which there is extensive use of what is called the controlled atmosphere storage, the system permitting a year round supply of fresh apples from one harvest to the next.
Obviously such a regulatory system assures quality at a relatively high price to which is added the punishingly high costs of transportation to markets thousands of miles away.
Nevertheless Washington apples compete successfully with the local product even in the east and in the south.
As a matter of fact that competition is too intense for the taste of the apple growers of North Carolina and that is really why we are here today.
Unknown Speaker: Now, one of the reasons you are here today is whether or not your client had standing to sue.
Are you going to get to that, because it seemed to me the threshold question that you would -- so long as you are going to get to that.
Mr. Gorton: In 1973, the North Carolina Legislature not only banned but made criminal the use of grades other than U.S. grades on closed containers of apples shipped to or sold in that state.
A year later, on our protest, the North Carolina Commissioner Of Agriculture wrote us and said, “I naturally want to have the sentiment from our apple producers on the change in the law since they were mainly responsible for this legislation being passed.”
Quite obviously we obtained no relief.
Now, the North Carolina statute contains a number of interesting and relevant features.
First, the statute does not require any apples shipped to or sold in the state to be either graded or inspected at all.
Second, the statute does not apply to any fruit product other than apples, though many other fruits are the subject to state grading systems.
Third, state grades may continue to be used on open containers of apples.
The Washington apples, by virtue of their storage and the distance from which they come, are all shipped to North Carolina in closed containers, but Mr. Justice Stewart we have made a misstatement on Pages 16 and 17 of our brief, in stating that all North Carolina apples are sold in open containers.
Justice Potter Stewart: Some are and some are not.
Mr. Gorton: Some are and some are not and fourth, state grades may not be used on closed containers of apples in North Carolina even though the U.S. grade is also shown.
Thus, all Washington apples sold in North Carolina will be graded; other apples may not be graded at all.
The North Carolina statute has substantially disrupted the Washington apple business.
For some time most Washington apple containers have been preprinted with the prominent display of grade in order to facilitate not only there handling and storage but their sale as well.
Now, Washington producers have four choices, all unpleasant: First, a manual obliteration of the Washington grade from each container which might possibly be shipped to North Carolina, a mutilation which detracts from its appearance and raises questions about the quality of the contents to all who see it, and this at a cost between five and 15 cents a box or as much as $72,000 a year for boxes bound to North Carolina alone.
Now, while the North Carolina trade takes only 1% of the Washington apple crop that involves some $2 million worth of apples and our shippers simply cannot determine in advance which 1% will eventually go to that state.
So their second alternative is to eliminate preprinted boxes entirely and hand stamp manually the grade on each box, as it is utilized at an obvious increase in cost.
Thirdly, of course, they can abandon the North Carolina market, or fourth they can abandon that historic grading system.
Justice Thurgood Marshall: I understand from Mr. Jordon that all this is in dispute, did they agree that you have all of these -- well how many do you have printed already?
Mr. Gorton: The vast majority of the boxes.
Justice Thurgood Marshall: How many?
Mr. Gorton: It would number in the millions Mr. Justice Marshall.
Justice Thurgood Marshall: Well, I mean do you print them up for 10 years?
Mr. Gorton: No probably one year supply at the time.
Justice Thurgood Marshall: Probably does not help me.
I want to know just how much it does cost.
Mr. Gorton: I believe that -- oh the cost is not in dispute Your Honor, the cost was found by the District Court.
Justice Thurgood Marshall: The total cost?
Mr. Gorton: The total cost of this, the (Inaudible) change.
Justice Thurgood Marshall: It is how much?
Mr. Gorton: It is five to 15 cents a box or between $23,000 and $72,000.
Justice Thurgood Marshall: For total?
Mr. Gorton: Yes.
Justice Thurgood Marshall: And out of how much?
Mr. Gorton: Well, presumably that would be 1% of all of the boxes utilized in the State of Washington.
Justice Thurgood Marshall: And 1% is very heavy.
Mr. Gorton: It is a tremendous amount.
That 1% is $2 million worth of apples.
Justice Thurgood Marshall: You spend $25,000 in advertising in North Carolina.
Mr. Gorton: That is correct.
Justice Thurgood Marshall: Any trouble with that?
Mr. Gorton: We would like to be able to advertise more but this mutilation or a lot of the boxes is at a tangible --
Justice Thurgood Marshall: I am not talking about mutilating; I am talking stop printing.
That does not cost you anything.
Mr. Gorton: Yes it would.
If we stop printing them and continue to use --
Justice Thurgood Marshall: You stop printing those from North Carolina.
1%, you stop printing 1% of the number you print.
Mr. Gorton: The problem with that Mr. Justice Marshall is that we do not know which 1% are going to go to North Carolina, even at the time at which they are shipped, when we have sold, say, to the safe way chain and its headquarters here in Washington, DC which covers North Carolina and a number of other states as well, or when we ship to an apple broker in Augusta, Georgia as we have customers in several states.
Justice Thurgood Marshall: But where do we get the 1%?
Your 1% is a firm figure.
Mr. Gorton: The 1% is a firm figure but we cannot determine which 1% of our apples will go to the State of North Carolina.
We can, of course, as North Carolina would like us to do abandon this historic grading system which has wider trade acceptance.
Incidentally the --
Justice Thurgood Marshall: I do not think North Carolina wants you to -- did North Carolina (Inaudible) what you ship to New York?
Mr. Gorton: They seem to be and they may affect us by this case.
In any event the affidavits which are found in the Appendix to this case which talk of confusion are all from people in the apple growing or selling business in North Carolina who do not deal in out-of-state apples at all.
All of the evidence in the record from those who do deal in out-of-state apples even in North Carolina want to be able to use and they have the Washington State grade.
So, the effect of this system has been added cost to Washington sellers and the North Carolina consumers, because of this cost some refusals by Washington apple producers to sell to North Carolina buyers and some refusals -- and this is in the record and undisputed -- by North Carolina purchasers to purchase Washington apples.
The Commission itself has been frustrated in its duty to enhance the market for Washington apples and in an advertising program which since it obviously can not emphasize price leads to speak to the quality of the apples concerned.
But, North Carolina consumer who must pay more receives less because of practical Washington packer who can not use the higher State grade is likely to shift apples to North Carolina which meet only the U.S. grade.
The North Carolina wholesaler or retailer, who wants the highest grade of Washington apples, is now denied to this grade information at least as a representation on the container in which the apples receive, and it makes it more difficult for him to get what he wants.
The only economic group which gains is the North Carolina grower, who spawned the statute in the first place and he gains by lessening his competition. =
This Court has consistently ruled that while a state may regulate commerce to protect the health or safety or its citizens from fraud even though there maybe some effect under the state commerce, it has a lack of power to retire the burden or constrict the flow of commerce simply for the economic advantage of the people within the state.
The Court has been particularly careful in scrutinizing restrictions placed on imported food products which compete with those produced locally, in validating a whole series of such restrictions on commerce in Meek and Milk cases.
It permits state restrictions under the state commerce only when the state’s interest in its citizen’s health or safety or the prevention of fraud or usurpation outweighs the adverse effect on commerce.
It will permit a producing state to enhance the reputation and quality of its agricultural product, but not where commerce is seriously burdened simply into increased local employment or only incidental lead to benefit its reputation.
Here we have a regulation, which costs consumer’s money, deprives wholesalers and retailers of desired information, and all of the people in the business whose testimony is in this record indicate that add works to the deferment of out-of-state businesses as well as businesses in North Carolina who deal in apples at wholesale or retail.
The Regulation is unique as well as dubious and it seems to us falls within several of your prohibitions perhaps most particularly Bibb v. Navajo Freight Lines.
And a final and added vies to the North Carolina scheme is that it establishes no standard for apples at all.
It simply prevents the use of someone else’s standards.
Now, North Carolina asserts that the Commission lacks standing to challenge its statute either on its own behalf or as a representative of Washington apple producers.
You have most clearly set these requirements out in Warth v. Seldin and just a month ago in Boston Stock Exchange v. State Tax Commission, as follows: The association may have standing in its own right to seek judicial relief from injury to itself and to vindicate whatever rights and immunities the association itself may enjoy.
Even in the absence of injury to itself, when association may have standing solely as the representative of its members.
The association must allege that its members or any of them or any one of them are suffering immediate of threatened injury as a result of the challenged action of the sort that would make out a justiciable case had the members themselves brought suit.
But even apart from this, whether an association has standing to invoke the Court’s remedial powers on behalf of its members, depends on substantial measure on the nature of the relief sought.
If in a proper case the association seeks a declaration, injunction, or some other form of prospective relief, this is exactly what we sought.
It can reasonably be supposed that the remedy, if granted, will inherit of the benefit of those members of the association actually injured.
Now, the Commission in the State of Washington was created to engage in research for the use and improvement of apples, to advertise for those apples, to educate the public about its grades and to stabilize and protect the apple industry of the State of Washington and to expand its markets.
Justice Potter Stewart: And that was done by the State Legislature.
Mr. Gorton: And that was done by the State Legislature, explicitly by statute.
Justice Potter Stewart: Right, the Commission represented by you as the Attorney General of the State is part of the government of the State of Washington, isn’t it?
Mr. Gorton: It is.
Justice Potter Stewart: So, it is not an association and it does not have members, am I correct?
Mr. Gorton: I think that the apple growers and for that matter, the packers of the State of Washington are not described as members of the association, as members in the statute.
They have all of the indicia have membership power Mr. Justice Stewart, they vote and they vote only --
Justice Potter Stewart: And taxpayers have all the indicia of members in the State Government, I suppose too by that, they vote and they pay dues.
Mr. Gorton: There is more to it than that.
These people, as Union members do, vote for their governing body which set all of the policies of the commission.
They also vote on any increase in the assessments.
The Commission may not of itself increase the assessment which it uses to promote.
Justice Potter Stewart: But, to come back you are --this is the part of the government of the state represented by you as Attorney General of the state and whether or not you have standing depends then ultimately upon whether or not the state has standing as parents patria, doesn’t it?
Mr. Gorton: That is an interesting question; it is not briefed by either side.
Justice Potter Stewart: That is the ultimate question, isn't it.
Mr. Gorton: But we are the state --
Justice Potter Stewart: And there are many cases holding that the state does not have standing as parents patria, are they not at least in the original jurisdiction of this Court and not in the antitrust fields Hawaii against Standard Oil.
Mr. Gorton: The Hawaii case indicates that the Attorney General of the state or the state itself does not have antitrust standing to sue for general damages to the citizens of his state.
In this case however, the Commission, though it is created by the state statute --
Justice Potter Stewart: And is a state agency.
Mr. Gorton: -- and is a state agency, is given a very specific grant of authority and a very specific limit which grant of authority includes the right to sue and to be sued in its own name.
Justice Potter Stewart: when we say the State of Washington had a Department of Commerce that had the same statutory right to sue or be sued in its function as to represent the business interest of your state, you would have the same situation, wouldn’t you?
Mr. Gorton: I think we would have a somewhat -- considerably --
Justice Potter Stewart: Constitutionally it would be the same thing, it will be the state.
Mr. Gorton: Amorphous situation, because that Department of Commerce would not directly represent these growers of a specific commodity.
The difference between the Department of Commerce and this situation, it seems to me, is a very considerable one.
The difference between a group, engaged in a single business which controls the conduct of that business, the Chief Justice asked whether or not this is not the functional equivalent of the trade association, and of course it is.
Justice Potter Stewart: Well, the answer by your opponent was no, it is not.
Mr. Gorton: The charge -- but the statute sets out the duties of this commission as being identical to those of any normal trade association.
Justice Thurgood Marshall: General Gorton, are you, by statute, representing any trade association in Washington?
Mr. Gorton: Pardon.
Justice Thurgood Marshall: Do you, as Attorney General, represent any trade associations in Washington?
Mr. Gorton: I do not, but at by the same --
Justice Thurgood Marshall: So they are not, they are not the same.
Mr. Gorton: Many apple commissions in other states or agriculture commissions in other states are represented by private counsel who may chose themselves; a majority of such state agencies as here.
Justice Thurgood Marshall: You admitted the state agency.
Mr. Gorton: There is no question about the state agency.
It does not seem --
Justice Thurgood Marshall: Well, how can be an association handle state agency?
Mr. Gorton: I was just trying to answer that question in advance Mr. Justice Marshall.
It does not seem to me that there is a distinction between a state agency of this nature and an association.
There is no reason why in law as it is in fact an agency may not at the same time, be an agency, a state agency and an association of the type which you have clearly given authority to bring lawsuits on behalf of its members.
We have the functional equivalent of that however.
Unknown Speaker: Yes, just as a fish or wildlife commission of a state, every state acts through its agencies and that department of a state would have be representing the conservation interest of the state and the fisherman and the hunters of the state.
That would still be the state though when it is sued.
Mr. Gorton: There is no question about the fact that we are the state, I think that the question as far as, one question as far as our standing here is concerned, however, out of two is whether or not in addition to being a state unlike a general agency of the state we are not also for the purposes of the law and association entitled to represent our membership which directly sets our policy.
Unknown Speaker: You have told us, you do not have any membership; let’s say, you have something like a membership.
Mr. Gorton: Our growers, those people who pay for the --
Unknown Speaker: Those people who produce apples in the State of Washington?
Mr. Gorton: In addition of course we have our own interests as a state and as an agency of the state --
Unknown Speaker: And that is a parents patria interest, isn’t it?
Mr. Gorton: Oh no, not a parents patria interest.
The interest of the Commission both, in promoting and enhancing its market and specifically in its advertising budget, is a direct interest in which it can sue on its own behalf even if it were not and even if it is not deemed to be in association entitled to sue on its own.
Unknown Speaker: At that point General Gorton, could I just ask this question?
As I understand that your budget is made up of the revenues coming on a ship, the growers in your state are assessed a fixed amount per bushel shipped, or something like that.
So that the number of bushel shipped determines your revenue.
Mr. Gorton: Precisely.
Unknown Speaker: Have you alleged -- and I do not think you have, but I want you to correct me if I am wrong -- have you alleged that the volume of your shipments is adversely affected by this statute?
Mr. Gorton: We have alleged that we have lost business in North Carolina by reason of this statute and we have proved it. We have not --
Unknown Speaker: But that does not be the answer of the question because if the apples go elsewhere your budget would be same.
Mr. Gorton: Exactly, if the apples go elsewhere the budget would be the same and to be perfectly honest with you, to the best of my knowledge in market for apples in recent years for all practical purposes all of the apples have been sold.
We are however effectively denied, at least in part, a significant portion of our market which would adversely affect our sales.
Justice Potter Stewart: Now, who is we and who is ours, there is a single plaintiff there?
Mr. Gorton: In this case it would be either the Apple Commission as such which the income of which it is dependent to the farming or purchasing of apples.
Justice Potter Stewart: But you do not make any sales, you do not have any income except the assessments made on the growers.
Mr. Gorton: We have income which comes from assessments from the growers which we expend on a number of activities, one of which is advertising.
Justice Potter Stewart: But your sales have not been affected, the Commission’s the agency’s sales have not been affected because it does not make any sales, its income has not been affected because its income is the assessments made on the Washington growers, so that my question was who we, who has been (Inaudible) the sales income.
Mr. Gorton: But that income could easily be affected by this kind of restrictions.
Justice Potter Stewart: It has not been though.
Mr. Gorton: -- the income generated from sales to North Carolina by Washington apple growers has been affected.
Justice Potter Stewart: But the Washington apple growers are not, either as a group or individually, are not the plaintiffs in this case.
Mr. Gorton: Yes, but they are the source of the income of the Commission Mr. Justice Stewart.
Justice Potter Stewart: By assessment?
Mr. Gorton: By assessment which assessment is based on production and on shipment.
Unknown Speaker: Which assessment --
Mr. Gorton: Pardon.
Unknown Speaker: Which assessment has not (Inaudible)?
Mr. Gorton: Well, the actual production of apples has increased over the last few years but the portions of that assessment which --
Unknown Speaker: So, how much has the party lost?
Mr. Gorton: The party has lost the effectiveness of its advertising.
Unknown Speaker: How much money has Washington State Apple Advertising Commission lost?
Mr. Gorton: It is effected to the amount of $25,000 which is its advertising budget in North Carolina.
Unknown Speaker: Oh, you have lost $25,000?
Mr. Gorton: It considers the value of the right to advertise in North Carolina to be worth at least the $25,000 which it expends there.
It does not stop our advertising but it makes our advertising far or less effective, I think by the amount we use for advertising in the State of North Carolina in a given year, which is $25,000.
We have alleged of course and the court below did not get to the question of our First Amendment rights to advertise in the State of North Carolina and in that case we in all probably do not need a minimum jurisdictional amount but the Commission has considered the right to advertise in North Carolina to a bit worth an expenditure of something over $25,000 a year.
At this point, we are denied the right to use what we can, what the Commission considers to be its most significant method of advertising in the State of North Carolina, i.e., the use of its grades --
Unknown Speaker: Did you consider bringing an original suit in this Court?
Mr. Gorton: No we did not.
There is --
Unknown Speaker: In your statutory authority, General Gorton, to sue and be sued is your statutory authority to sue in the name of the state or I assume to just sue in the name of the Commission.
Mr. Gorton: To sue on the name of the Commission, and this action is brought on the name of the Commission.
Unknown Speaker: But if the case of City of Milwaukee or rather the State of Illinois v. City of Milwaukee several years back would be any guide that at least makes suggest that you perhaps would not have an original case here.
Mr. Gorton: We have no original jurisdiction in this Court Your Honor.
The right to sue and to be sued is only on the name of the Commission and as a matter of fact the statute specifically exempts the State other than the income of the Commission itself from any adverse judgment.
The general credit of the State is not involved in any suit for monetary damages.
Unknown Speaker: When you use the term ‘association’ -- I think you are using at lower case on the ‘a’ that is small letter ‘a’ association -- these people are associated together by law, are they not?
Mr. Gorton: They are associated together by law and the fact that they are mandated to engage in such an association makes them no different in the analogy which you have made earlier of membership in a labor union which has a close shop agreement with a particular employer.
That membership is mandated of course as a condition of having a job and just as here, in order to grow or to ship apples in the State or to produce apples commercially in the State of Washington (Voice Overlap) under the law.
Unknown Speaker: Well, taxpayers of the State are associated by mandate of law and the government of the State.
Mr. Gorton: In the government all citizens who are --
Unknown Speaker: All taxpayers at least.
Mr. Gorton: All taxpayers or all citizens at least are so associated.
It seems to me however that the thrust of your concern with the right of an association to sue for its members is based not on whether that association is created by statute or created voluntarily, whether or not its membership is free to join or not to join, but by whether or not the representative will in fact preferably represent the interest of its members, whether or not a judgment entered on behalf of or against the so-called association, will bind or will affect if the judgment is what they seek will affect affirmatively the members of the association.
Justice Thurgood Marshall: Generally the real problem is that one grower would not have $10,000 jurisdiction.
That is maybe the real problem.
Mr. Gorton: I simply cannot answer that.
I suspect that well we have many growers; there are almost 6,000 growers in the state we have only someone 120 packers and shippers and it is very, very possible that a given packer or shipper might have that amount involved in sales to the State of North Carolina when you reflect there are $2 million for the sales --
Justice Thurgood Marshall: But did you show by affidavit?
Mr. Gorton: No, there is nothing in the records to indicate that.
Your right thought as to growers Mr. Justice Marshall, probably we would have that amount as to a shipper.
In summary, it seems, both from your questions and from the argument of the opposing counsel, there is little question here as to the interference in commerce of the particular proposal of a particular statute which the State of North Carolina has passed.
It quite obviously falls within the consistence ban the State has had and this Court has placed on in the state producers affecting commerce simply for the benefit of those producers, even though they set forth some kind of guides of the protection of the consumer or the health and safety of the people of the State.
The problem of standing can be resolved either by treating the Washington State apple Advertising Commission itself as the sole party in an unrepresentative nature in the State but permitting it to deal with the losses, to the business in which it is solely engaged or by reason of its own advertising budget in the State of North Carolina.
Alternatively, it can be treated appropriately as an association since a decision here would affect all of the growers and all of the shippers in the State of Washington.
Thank you Mr. Chief Justice.
Chief Justice Warren E. Burger: Thank you General Gorton.
Mr. Jordan, you have on half minute left.
Is there anything you want to tell us in that half minute?
Rebuttal of John R. Jordan, Jr.
John R. Jordan, Jr.: Thank you may it please the Court.
I have no rebuttal.
Chief Justice Warren E. Burger: Thank you gentlemen.
The case is submitted.