R-CALF USA wins round two in checkoff lawsuit
June 21, 2017
A second Montana judge has ruled that the Montana Beef Council's use of checkoff funds is a violation of free speech.
U.S. District Court Judge Brian Morris for the District of Montana ruled June 21, 2017, that the beef checkoff program violates the first amendment, and placed an injunction on the Montana Beef Council preventing it from retaining checkoff funds without consent from the payer.
According to R-CALF USA CEO Bill Bullard, the Montana Beef Council is still allowed to collect the one dollar federal checkoff for each beef animal sold, but it must forward the entire dollar on to the Cattlemens Beef Board unless it obtains consent from the payer to retain the other half of the dollar.
Bullard said the preliminary injunction is a win for the members of his group. But they aren't done. "This was a first step. Now we need to decide if we should be doing this in other states with private beef councils, or maybe the USDA will review this ruling and voluntarily comply with its constitutional requirements in other states. You wouldn't think USDA would want to continue operating programs where they know they are violating the constitutional rights of producers, so maybe this case will prompt them to take action to preserve and protect cattle producers' freedom of speech in other states," said Bullard.
State beef council groups across the country, including the Montana Beef Council generally collect the one dollar federal beef checkoff. The groups forward half of each dollar to the national Cattlemens Beef Board, and retain the other half of each dollar to be used by the state group for beef promotion, research and education. Often, states send a portion of the retained funds to a national committee called the Federation of State Beef Councils, an arm of the National Cattlemens Beef Association.
PAYS Livestock manager Bob Cook, Billings, said he has not been contacted about making any changes to the way the salebarn collects the checkoff funds.
Cook said PAYS submits checkoff funds to the state department of agriculture on a regular basis, and the funds are then forwarded to the beef council.
The department of ag submits a report to PAYS and other sale barns detailing the amount of checkoff dollars due, based on state brand inspection information, he said.
The crux of the R-CALF USA lawsuit was the fact that the Montana Beef Council is a private entity, not governed by federal law, and that the council was using funds collected from R-CALF USA members to publicly advertise concepts its members didn't agree with.
R-CALF USA complained, in their suit, that the Montana Beef Council had financed a promotional campaign with Wendy's fast food restaurant to advertise "North American" beef. "The council promotes the message that there is no difference between domestic beef produced under U.S. food safety laws and beef produced in foreign countries," said the R-CALF news release.
US Magistrate judge John Johnson had ruled similarly in December of 2016.
Judge Morris, in last week's ruling, said
"The Government violates the First Amendment when it compels a citizen to subsidize the private speech of a private entity without first obtaining the citizen's 'affirmative consent.' … What distinguishes unconstitutional subsidies for private speech from constitutional subsidies of government speech is not the content of the speech, but rather that the latter is 'democratic[ally] accountab[le].' … The USDA does not control how the Montana Beef Council spends the money that it obtains from the federal Beef Checkoff Program."
The plaintiff would suffer irreparable harm by first amendment rights being violated, he added. "A preliminary injunction would protect not only Plaintiffs members but also all other Montana cattle producers who may disagree with the speech at issue," said the judge.
Some Montana producers don't take issue with the message being spoken by the Montana Beef Council. Errol Rice, Montana Stockgrowers Association executive director, said his group strongly supports the checkoff.
"I think our members feel for the most part very good about how the program is being run," he said.
"But if the court ultimately decides after a full hearing that the injunction is to become final, then we'll have to adjust. We'll have to roll up our sleeves as an industry and try to modify the checkoff to meet those legal requirements," he said.
The Montana Beef Council retained almost $925,000 during its 2016 fiscal year, after forwarding approximately the same amount to the federal Cattlemen's Beef Board.
Administration was the group's largest single expense, at over $312,000. This figure includes board expenses and travel along with office expenses, insurance and other administrative costs.
About $278,000 went for domestic marketing programs, $112,000 for international marketing programs, $50,000 for promotional programs. Other, smaller budget items include advertising, beef safety, producer communications, education, food services and retail programs.
The Montana Beef Council is comprised of nominees from ag groups across the state. The Montana Stockgrowers appoint two members. The following groups appoint one member each: Montana Farm Bureau, Auction Markets, Dairy Association, Montana Angus Association, Montana Food Distributors, Montana Cattlemen's Association, Cattle Feeders, Montana Farmers Union, Montana Cattlewomen, Montana Meat Processors.
Montana Cattlemen's appointee Bruce Lee has been a Montana Beef Council board member for nine years. His term will be fulfilled this September. The Choteau cattle producer said he remembers the discussion and the the vote to implement the beef checkoff in the early 1980s. "There wasn't a lot of support at that time. A lot of ranchers said that money would be sent to a big office and we'll have no say in how it is spent," Lee said.
Lee said he believes in the promotion of beef but he believes some changes need to be made to the checkoff system.
"R-CALF didn't like that were advertising North American beef – that encompasses Canada and Mexico. As a producer, I probably agree."
Lee said he tries to be mindful of his cattle producer neighbors when reviewing requests for funding. "I have to see a little more detail and get into discussions, and ask 'how does that promote beef?' or remind them 'we can't spend our money on that.'"
Lee said the Montana Beef Council is next scheduled to meet in September when they would normally review requests for project funding.