Commodity Boards Face Litigious Times

A 3rd U.S. Circuit Court of Appeals ruling last week against the National Dairy Promotion Board and its “Got Milk?” spots has left marketing boards wondering whether national ads via state-run organizations can be funded by involuntary assessments.

“We faced this issue in a court case in California several years ago and won,” said Nancy Fletcher, vp of communications for the California Milk Advisory Board. “[But] commodity boards may have to face [other] challenges like this.”

Eight of the national groups that have assessment-based marketing plans have faced some form of constitutional challenge. In the Dairy Board case, the judges held that farmers could not be required to pay for the ads through the board’s program, in which they are charged on a production basis.

A similar case involving a rancher’s suit that went against the Cattlemen’s Beef Board in the 8th Circuit Court now is being considered by the U.S. Supreme Court. “We’re disappointed but not surprised [by the dairy ruling],” said Monte Reese, COO of the Beef Board.

The court considered the ads “state-compelled speech,” said Doug Wood, partner at advertising law firm Reed Smith Hall Dickler in New York. “The issue here is a state action,” he added. “This precedent poses a serious dilemma for the board. Can they say that an ad running in Wisconsin wasn’t paid for by farmers in Pennsylvania?”