Ad Campaign Assessments Found Unconstitutional

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WASHINGTON ( -- A federal appeals court has ruled that forcing dairy farmers to fund an advertising program promoting milk is unconstitutional.

A three-judge panel of the U.S. Court of Appeals

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for the 3rd Circuit sided with the operators of a small dairy farm in Pennsylvania who objected to paying for milk ad campaigns and other programs. Their opinion was released late yesterday.

Forced to pay
The farmers, Joseph and Brenda Cochran, whose case was backed by the Institute for Justice, argued that the ad assessments were forcing them to pay for speech they didn't support.

The judges ruled that the law creating the assessment "violates the Cochrans' First Amendment free speech and association rights by compelling them to subsidize speech with which they disagree," reversing an earlier lower court ruling.

Dairy Management Inc., which collects the roughly $43.8 million in marketing dollars from dairy farmers for "Got Milk" ads and other promotions through the National Dairy Checkoff program, intends to further appeal the decision.

Will not disrupt efforts
David Pelzer, vice president of industry relations for DMI, said the ruling will not disrupt current marketing efforts, including Got Milk ads from Interpublic Group of Cos.' Lowe, New York. "We're confident that ultimately courts will rule that the national dairy checkoff is good for America's dairy famrers and for the American public."

DMI in some cases jointly markets with the Milk Processors Education Program's milk mustache campaign, also handled by Lowe. Although MilkPEP, funded by dairy processors, was not named in the Pennsylvania suit, its program also has been called into question, as it is one of the biggest of the farm and livestock ad marketing programs run through assessments.

Yesterday's decision will most likely force the U.S. Supreme Court to again review the constitutional status of ad assessments that support marketing programs for a range of farmed goods from oranges to cotton to beef.

Earlier cases
The Supreme Court in an earlier case in 2001 said assessments that include advertising as part of an industry program to set standards for fruit sizes or packaging were constitutional, but that forcing farmers to pay into marketing programs was "compelled speech" and therefore unconstitutional.

Since then, lower courts have ruled accordingly.

Last July the U.S. Court of Appeals for the 8th Circuit tossed out the assessment of the Cattlemen's Beef Promotion and Research Board supporting the $13 million "Beef: It's what's for dinner" campaign from Publicis Groupe's Leo Burnett USA, Chicago. Cattlemen were charged $1 per head of cattle, as authorized under 1985's Beef Promotion and Research Act, to fund the ad program, which raised $80 million a year.

In October 2002, the U.S. Court of Appeals for the 6th Circuit upheld a lower court decision that the assessment to fund "The Other White Meat" ad campaign for the National Pork Producers Council was unconstitutional. That effort includes a $5 million to $10 million campaign from Interpublic's Campbell Mithun, Chicago.

'Effective' marketing tools
In a statement today, Agriculture Secretary Ann Veneman said her department is reviewing the ruling but "regards such programs, when properly administered, as effective tools for market enhancement. We are consulting with the U.S. Department of Justice to determine the next steps regarding this matter."

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