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Avenging the raisins
The Supreme Court strikes a blow for a free market
Since the grim days of the Great Depression, raisin farmers in California’s fabled San Joaquin Valley have raised their grapes under a food-regulatory regime that forces them to hand over a portion of their crop to the government, often without getting anything for it. The U.S. Supreme Court took a step, a big one, on Monday to give raisins something to dance about.
Like many New Deal programs, raisin rationing was instituted under the foolish belief that manipulating the market to raise the price of raisins would make more money for the growers and improve the valley’s economic health. Hence, the Raisin Administrative Committee, a cartel that dictates how much of the crop will be taken each year to reduce supply. In 2003, the government board dictated that 47 percent of the raisins grown that year would be confiscated with nothing for the growers. That was too much to swallow for Marvin and Laura Horne, farmers and processors in Fresno. Millions of pounds of raisins became the “fee” farmers had to pay to stay in business. The raisin board justified the scheme spending some of the loot on an advertising campaign. (You might have heard about it through the grapevine.)
The Hornes refused to hand over their raisins, calling the program “a tool for grower bankruptcy, poverty and involuntary servitude.” For refusing to go along with the scheme, the Hornes were fined $650,000, equivalent to the cash value of their raisins. They sued, arguing that the raisin law took their property without just compensation in violation of the Fifth Amendment’s prohibition’s against being “deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” Despite plain language that only a lawyer could misunderstand, a district court judge upheld the cartel scheme, saying that by becoming farmers, the Hornes “voluntarily chose to send their raisins into the stream of interstate commerce,” thus placing them under government control. The 9th U.S. Circuit Court of Appeals said the Hornes filed their claim in the wrong court.
The Obama administration took the side of the price-fixers, arguing the Hornes should have handed over their raisins and asked a different court for their money back, a process that would make it all but impossible to raise a constitutional challenge to the law. That extreme reasoning was too much for a principled liberal, and Justice Elena Kagan asked whether the court should send the case back to a lower court to determine whether the raisin program was either an unconstitutional taking or “the world’s most outdated law.”
Mirabile dictu, all nine of the Supreme Court justices, who rarely all agree on anything, agreed on Monday to reverse the oft-reversed 9th Circuit and send the case back to be argued squarely on the merits of the Fifth Amendment claim, rather than on narrow jurisdictional issues. This opens the way for a similar decision to strike down the price-fixing programs that raise the prices of dozens of food items, including walnuts, almonds, cherries and cranberries. Hurrah for a liberated market.
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