R-CALF survives first battle in lawsuit against beef checkoff

A federal magistrate judge sided with the plaintiffs in the lawsuit, which claims the federal law requiring funding of the MBC is unconstitutional.

Tiffany Lashmet

Associate Professor & Specialist / Texas A&M University AgriLife Extension

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Additionally, the magistrate suggested a preliminary injunction be issued, which would prohibit the MBC from using checkoff dollars to fund promotional campaigns unless they obtain affirmative permission from cattle producers that their assessment may be retained by the council and used for advertisement.

Most producers are probably familiar with the Beef Promotion and Research Act of 1985, more commonly referred to as the beef checkoff, which imposes a $1-per- head fee when cattle are sold. The money generated from these fees is used to fund promotional campaigns and research.

Funds may be collected by a “qualified state beef council” (QSBC), which is required to comply with a number of rules and reporting requirements in order to be allowed to collect the funds. Historically, 50 percent of each dollar collected went to the federal Cattlemen’s Beef Production and Research Board (Beef Board) and the other 50 percent was retained by the local qualified state beef council.

Now, however, a producer may direct that 100 percent of his or her assessment be sent to the federal Beef Board.

Certain Montana cattle producers were unhappy with the promotional efforts of the state’s QSBC and the MBC in particular, because the MBC did not make any distinction between foreign and domestic beef in promotional efforts.

The producers, members of R-CALF and United Stockgrowers filed suit against the USDA in May 2016 challenging the use of federally mandated funds to pay for speech with which the plaintiffs disagree. Specifically, the plaintiffs claim it violates their First Amendment rights when they are forced to pay into the MBC to support speech contrary to the plaintiffs’ beliefs.

The USDA filed a motion to dismiss the lawsuit, claiming the plaintiffs failed to state an adequate claim. In December, a federal magistrate judge for the District of Montana sided with the plaintiffs and recommended the District Court deny the USDA motion to dismiss.

First, the magistrate found that the plaintiffs did have standing to bring the case, which essentially means they are the right people to bring the case because the issue at hand will have an impact on them.

The magistrate rejected the USDA argument that the plaintiffs had to list the names of individual members bringing claims, finding that the declarations from sample members stating they were forced to fund the MDC were sufficient.

Second, the magistrate found that because the U.S. Supreme Court has previously found that compelling people to fund a private message with which the individuals disagree violates the First Amendment, precisely what the plaintiffs allege is occurring in this case, they did state a valid legal claim.

The fact that the opt-out provision exists and allows producers to avoid funding the MBC was not determinative at this point, as the Supreme Court has held in at least one other case that an opt-out provision does not automatically alleviate First Amendment concerns.

Third, the magistrate rejected the UDSA’s request to postpone the case until ongoing federal rulemaking regarding the opt-out provision is completed. The USDA argued that because the rules for exactly how the opt-out provision will be utilized are still being created and the final rule could alleviate the plaintiffs’ concerns altogether, the court should not take the time and resources to consider this case now.

The magistrate found that because the rulemaking was ongoing indefinitely and there was no proposed timeline for it to conclude, this argument was rejected.

At this point, the magistrate judge’s ruling is only preliminary and will be reviewed by the U.S. District Court judge assigned to the case. If upheld, the injunction will prevent the MBC from spending checkoff dollars on advertising, and the case would proceed to discovery and the remainder of the judicial process.