(April 3, 4:07 p.m., UPDATED COVERAGE) Commodity boards are hailing a judge’s ruling favoring the California Table Grape Commission’s mandatory assessments for generic advertising, with the hope it sets an industry standard for grower-supported programs.

“I think this is a very strong decision that will help provide some final level of clarity in the constitutionality of mandated programs,” said Kathleen Nave, president of the Fresno-based grape commission.

Her view was echoed by other board leaders.

“I think it’s absolutely wonderful, because I’m not sure these lawsuits do a lot of good for anybody, and they certainly do some harm,” said Dave Carlson, president of the Washington State Apple Commission, Wenatchee. “It would just be nice to get this all put to bed and move on.”

Judge Oliver Wanger issued a 194-page ruling March 31 in the lawsuit, filed by Delano Farms, Delano., Calif., in 1996. It was among the first of several lawsuits challenging the assessments on the basis they violated the First Amendment rights of companies. Wanger ruled that advertising is part of the organization’s overall efforts to increase demand for California table grapes.

The California Tree Fruit Agreement, Reedley, is awaiting a ruling on a similar challenge.

“It’s a positive step for all of the commodity boards, and we’re anxiously waiting our appeals decision from the U.S. Supreme Court,” said Sheri Mierau, president of CTFA.

The grape commission’s legal battle might not be over, however.

“We will definitely appeal,” said Brian Leighton, a Clovis, Calif., attorney representing Delano Farms.

The ruling hinged on the commission’s origin — it was created by the state’s legislature. Wanger said that made the advertising government speech and therefore immune from a constitutional challenge.

But the California Department of Food and Agriculture does not approve table grape commission budgets, expenditures or advertising copy, Leighton said.

“The bottom line is — did Judge Wanger get it right when he said anything emanating from the commission is government speech because it was formed by the state legislature? The answer is no,” he said.

That conclusion brought a sharp response from Seth Waxman, an attorney representing the grape commission.

“There’s no doubt that Judge Wanger is entirely correct, that not only is the commission subject to effective oversight by the (California) Department of Food and Agriculture, but the commission is the government under the supreme court’s test,” said Waxman, of Wilmer, Cutler, Pickering, Hale and Dorr LLP, Washington, D.C.

“We have a ruling by a very careful district judge that provides at least three independent grounds to support judgment in favor of the table grape commission,” he said.

Federal or state officials oversee virtually all efforts of the California Tree Fruit Agreement, Mierau said. The state agency approves all budgets, marketing and public outreach materials. In addition, representatives of the department of agriculture attend all of the organization’s executive and joint committee meetings, she said.

Research efforts are approved by the U.S. Department of Agriculture, she said.

CASE HISTORY

Acting on a motion to dismiss filed by the commission, the court rejected the Delano Farms suit in 1999 and ordered assessments that had been held in escrow to be returned to the commission. Delano Farms then appealed to the San Francisco-based 9th Circuit Court of Appeals, which sent the case back to the lower court for trial. The two sides argued the case in January 2007.

“This cost to ordinary table grape growers to litigate these issues over the decade is really regrettable,” Waxman said.

The legal fees will apparently continue to add up. The case will probably have to go to the Supreme Court to get settled, Leighton said.

Nave said the commission has not calculated the cost of fighting the lawsuit, but said that the legal fees were significant.

The various lawsuits come at a time when there are many opportunities for suppliers, Carlson said.

“It’s an opportunity for the ag industry to get financially sound if you’re not focusing on something that has nothing to do with making your business work well or benefiting your consumers,” he said.

The table grape commission was created in 1967. By California law, it must be extended every five years via a grower referendum.

“I think an organization like this that works on behalf of the industry as a whole can make a significant positive benefit for that industry,” Nave said. “There are more than 500 table grape operations in this state, and the vast majority of those grower-shippers are not part of this very long-running litigation.”