On Wednesday, Dairy Farmers of America, Inc. filed suit in the Eastern District of Arkansas against Wes Ward “in his official capacity as Secretary of the [Arkansas] Department of Agriculture”; and Frederic Simpson “in his official capacity as Chairman of the Arkansas Milk Stabilization Board.” DFA seeks declaratory and injunctive relief to prevent the application to it of an Arkansas regulation regarding milk prices that, Plaintiff alleges, will be effective on the day after the filing of the suit.
DFA describes itself as “Kansas cooperative marketing association … owned by over 6,000 family farms across the country, including Arkansas and its six surrounding states.” These cooperative entities “purchase and then market the raw milk produced by their members” and effect “the sharing of economic risks and rewards” by members.
Plaintiff alleges that the dairy industry is subject to “pervasive” federal regulation, including the statutory power of the Secretary of Agriculture to “regulate minimum prices paid to producers of milk via marketing orders for particular geographic areas.” [1] In addition to federal regulation, Plaintiff further alleges that the relationship between it and each of its members is governed by a “Membership and Marketing Agreement,” which governs, among other things, computation of the payments the member-farmer is entitled to receive from sales by Plaintiff.
With allegations of federal regulation and the contractual relationship between Plaintiff and its farmer-owners as background, Plaintiff alleges that in 2021 Arkansas enacted a statute “which “purported to give” the Milk Stabilization Board power to require that Arkansas milk producers receive higher prices than those established under federal regulation. Pursuant to that statute, the Milk Stabilization Board has promulgated the regulation that, Plaintiff alleges, becomes effective on June 2, 2022.
Plaintiff alleges that that the Arkansas statute and regulation, at least as interpreted by the Arkansas Department of Agriculture, may require Plaintiff to pay its Arkansas members prices in excess of those called for in its agreements with members and in excess of amounts required under federal law, which will necessarily harm other members in its Southeast region who are not from Arkansas.
Plaintiff seeks judicial declarations that the Arkansas statute and rule i) unconstitutionally interfere with Plaintiff’s contracts with its members (or do not apply to Plaintiff); ii) are preempted by federal law; or iii) are unconstitutional attempts to regulate interstate commerce and exceed the police powers of the state. Plaintiff also seeks injunctive relief and attorneys’ fees.
Plaintiff’s counsel is Friday, Eldredge & Clark, LLP.
