Supreme Court decision may influence cherry industry legal battle

Aug 26, 2015

The future of Michigan’s cherry industry may be tied to what happens in the courtroom.

An Elk Rapids cherry processor is suing the federal government over its power to regulate the industry. The man who filed the lawsuit is encouraged by a recent decision from the U.S. Supreme Court involving raisins.

    

Bill Sherman has run Burnette Foods with his brothers for 59 years. Way in the back of his factory are rows of pallets, stacked floor to ceiling with thousands of cans of pie filling. It’s pie filling that Sherman can’t sell.

“It’s very annoying and expensive, obviously,” he says. “It’s just something that we wish we could escape from.”

The power of the Cherry Board

He can’t sell these cans of pie filling because of rules enforced by the Cherry Industry Administration Board.

The board is empowered by the U.S. Department of Agriculture, and it’s responsible for regulating the cherry industry. Its main tool is a thing called Marketing Order 930.

The marketing order was put into place 20 years ago, when cherry prices hit rock bottom. It’s meant to stabilize the industry. So every year, the cherry board tells processors like Burnette Foods how much product they can put on the market.

Bill Sherman is suing the USDA over its power to prevent him from selling cherry pie filling.
Credit Aaron Selbig

That’s how Bill Sherman ends up with a warehouse full of unsold pie filling.

“My brothers and I have been in this business since we were teenagers and we’d like to be able to expand our business,” says Sherman.

This year, Sherman is importing tart cherries from Poland and Turkey – cherries he’s allowed to sell – while cherries from his backyard sit in a warehouse. He’s fed up with the marketing order, and has been fighting it in court for years.

“I served in the board for I believe it was six years and in my opinion, the board has become more and more restrictive,” says Sherman. “We’ve become very much a no growth business.”

Jim Nugent is vice-chairman of the cherry board – and a cherry grower. He thinks Bill Sherman’s argument carried more weight ten years ago than it does today.

“Because I see the board is being significantly less restrictive than it was,” says Nugent.

Nugent says that over the last five years, the board has shifted its focus from heavy regulation to trying to expand the market for cherries. And he point out that every six years, the cherry growers vote on whether to keep the marketing order. So far, they have.

The Supreme Court weighs in

Bill Sherman’s lawsuit isn’t against the cherry board. It’s against the USDA that authorizes it. And this spring, the U.S. Supreme Court struck down another USDA marketing order.

The court ruled the USDA does not have the power to confiscate raisins from growers in California as a means to regulate the raisin market. The USDA did not respond to a request for comment for this story but Nugent says he’s not worried.

“My expectation is that it’s not going to have an effect on our marketing order because our marketing order does not take possession of the cherries like the way the raisin marketing order did,” says Nugent.

And that does appear to be a key difference. In the Supreme Court case, the USDA was actually physically taking raisins from the plaintiffs – the Horne family.

Bill Sherman was there in the courtroom when the case was being argued.

“The solicitor general trying to defend the USDA in the Horne case was almost laughed out of the courtroom,” he says. “I’m sure it was one of the most embarrassing moments that guy ever had to experience.”

Sherman is hopeful the Horne case will apply to the cherry industry. His argument is that what the USDA is doing to him isn’t much different than taking the Horne family’s raisins.

“The vast majority of the products we produced are …processed in metal containers,” he says. “Metal containers have a shelf life and our customers do not want year-old products. So I think an argument could be made that ours is a takings as well.”

So far, there’s been a mix of rulings from the judges. One ruled in favor of Burnette Foods but on appeal, another favored the USDA. Both sides are filing legal briefs in preparation for round three.