Top court to eye co-op ads

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The U.S. Supreme Court has agreed to revisit whether producers of agricultural products can be required to contribute funds to support co-op ad efforts, potentially impacting marketing funds the government pegs at $600 million annually.

The high court ruled 5-4 in 1997 that California tree fruit growers' First Amendment rights were not violated as a result of their having to pay for advertising. However, the 6th U.S. Circuit Court of Appeals ruled in a case filed by United Foods, a mushroom grower that refused to pay, that it could not be compelled to help fund collective ads commissioned by the Mushroom Council.

The main reason for the difference, according to the federal appellate court ruling, is that the California tree fruit industry is heavily regulated, while the mushroom industry is free of regulation.

The U.S. Department of Agriculture, which oversees the marketing programs, appealed to the U.S. Supreme Court, and last week, in an unusual move, the high court agreed to hear the case. Harvard University professor Laurence Tribe, an expert in First Amendment law who last week argued Vice President Al Gore's case in the U.S. Supreme Court, is one of the attorneys for United Foods.

POSSIBILITY OF REVERSAL

"It is rare that the Supreme Court revisits something as narrow within this short limit of time," said Dan Troy, a Washington lawyer. That could indicate there is a real possibility the Court may reverse its stance.

A number of food co-ops, including the representatives of the mushroom, beef, milk and egg industries, allied with the government on this issue, and filed a friend of the court brief in the 6th Circuit. They may also file a brief with the Supreme Court.

While the food co-ops maintain that individual growers and producers can be compelled to contribute toward the ads, ad industry representatives take the opposite view, arguing that ads are protected under the First Amendment as "commercial speech." They maintain requiring individuals to pay for an ad campaign is an unconstitutional form of "forced speech."

The current court case stems from the refusal of United Foods to chip in for mushroom-industry advertising, which totals about $1 million a year nationally. After the company refused, the Agriculture Department asked a federal district court in Tennessee to assess United Food about $8,000 a month, based on the quantity of mushrooms it produced. The lower court ruled in the government's favor, but United Foods appealed to the 6th Circuit, which agreed the assessment violated the First Amendment.

United Foods' lawyer, Bradley MacLean, said his client objects to the ads' content. "Generic advertising programs tend to send a message that mushrooms are a generic, homogenous product," Mr. MacLean said. "We try to send a message that our mushrooms are unique." Hoffman/Lewis, San Francisco, handles the Mushroom Council's advertising.

United Foods also objected to two specific campaigns for ethical reasons. A Valentine's Day initiative presented mushrooms as aphrodisiacs, which displeased the company, as did a joint program with a wine manufacturer.

EFFECTIVE ADVERTISING

But the co-ops argue United Foods' reasons do not outweigh the common interests in promoting the industry. "This type of commodity advertising has proven to be effective and desirable," said John Roberts Jr., one of the lawyers for the co-ops. "Any time you have a collective advertising program, individual producers may feel differently," he said.

The high court decision to take the case comes amid attacks on the 29 marketing-board and promotional-order programs that control more than $600 million in advertising. In 1998 and 1999, news stories about spending by the Cotton Board on an annual ball and questions about the milk industry's success raised by the Department of Agriculture's Office of the Inspector General, prompted the Agriculture secretary to appoint a special panel to look closely at the program. Its report urged competitive bidding for advertising contracts and also that growers and producers be asked much more regularly whether they want the programs to continue.

Following the report, the Agriculture Department ordered a new referendum for pork producers and petitions have been filed and certified for a vote by beef producers. Pork producers have already voted on whether to continue the program under which they advertise "the other white meat" and results of the voting are due to be announced in December. The agriculture department in January is expected to order a referendum for beef processors.

Meanwhile, individual growers in several cases have challenged the assessments in federal and state courts under "compelled speech" arguments. Most individual challengers have lost in court, with the exception of the mushroom case now at the Supreme Court and a recent California case, in which the California Supreme Court ruled that forcing a plum grower to pitch in toward ads might violate the state's constitution.

Copyright December 2000, Crain Communications Inc.

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