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TUSCAN DAIRY FARMS, INC. v. BARBER

April 24, 1978

TUSCAN DAIRY FARMS, INC., Plaintiff,
v.
J. ROGER BARBER, as Commissioner of Agriculture and Markets of the State of New York, Defendants


Nickerson, District Judge.


The opinion of the court was delivered by: NICKERSON

MEMORANDUM AND ORDER

NICKERSON, District Judge

 Plaintiff, a New Jersey corporation engaged in the business of processing and selling milk and milk products, brought this action against the New York Commissioner of Agriculture and Markets ("the Commissioner") on October 26, 1976, in the United States District Court for the Southern District of New York for an injunction against enforcement of Article 21 of the New York Agriculture and Markets Law ("the Milk Control Act").

 Plaintiff is licensed by the New York Department of Agriculture and Markets ("the Department") to do business in Orange and Rockland Counties in New York. Having been approached by a customer to deliver milk and milk products to four supermarkets in Richmond County, plaintiff applied on May 28, 1975 to the Department for a license to do business at wholesale in that county and also in New York, Bronx, Kings and Queens Counties.

 On June 26, 1975 the Department issued a notice scheduling a hearing for July 15, 1975 to consider plaintiff's application to serve wholesalers in Richmond County. Plaintiff "agreed that other counties included" in the application "would be considered at a later date."

 After the hearing the Commissioner denied the license to do business in Richmond County. Acting pursuant to Section 258-c of New York's Agriculture and Markets Law, set forth in pertinent part in the margin, *fn1" he found that plaintiff's entry into the Richmond County market would, in the words of the statute, "tend to a destructive competition" in a market already adequately served and that such entry would not be "in the public interest." *fn2"

 Plaintiff forthwith commenced proceedings in Supreme Court, Albany County, pursuant to Article 78 of the C.P.L.R., against the Commissioner, challenging his denial of the license. Plaintiff alleged, among other things, that the Milk Control Act as applied by the Commissioner "effects an unreasonable burden upon interstate commerce" in violation of the Commerce Clause of the United States Constitution.

 The action was transferred to the Appellate Division, Third Department. Before that court reached a decision plaintiff brought this action under 42 U.S.C. § 1983. The complaint alleged in a first claim the Commissioner's denial of the license to serve Richmond County and asserted that his "determination" pursuant to the Milk Control Act "imposes an unlawful barrier against interstate commerce" in violation of the Commerce Clause. In a second claim plaintiff repeated the allegations of the first claim and asserted that plaintiff "desires to commence the sale of milk at wholesale to purchasers in all counties of New York State" and that the Milk Control Act, to the extent it prevents fully qualified non-New Yorkers from selling milk on the ground that competition will be adversely affected, is invalid both on its face and as applied by reason of the Commerce Clause.

 Plaintiff sought a preliminary injunction, and the Commissioner answered and moved to dismiss the complaint and for a transfer to the Northern District of New York.

 By order entered January 3, 1978, Judge Broderick, holding that venue was improper in the Southern District, transferred the case to this court, pursuant to 28 U.S.C. § 1406(a).

 In the meantime the Appellate Division entered an order on August 18, 1977, confirming the Commissioner's determination and dismissing the Article 78 petition. Tuscan Dairy Farms, Inc. v. Barber, 58 A.D. 2d 491, 397 N.Y.S. 2d 446 (3rd Dept. 1977). The Appellate Division focussed explicitly on plaintiff's Commerce Clause contention and rejected it. Plaintiff has appealed to the New York Court of Appeals.

 The Commissioner now moves to dismiss the complaint on the ground of res judicata. Plaintiff concedes that if the complaint had merely alleged the denial of the application to sell milk at wholesale in Richmond County the state court determination would be res judicata. Ellentuck v. Klein, 570 F.2d 414 (2d Cir. decided January 4, 1978); Winters v. Lavine, 574 F.2d 46 (2d Cir. decided January 16, 1978); see also Ornstein v. Regan, 574 F.2d 115 (2d Cir. decided April 4, 1978).

 Plaintiff contends, however, that to the extent that the complaint alleges that plaintiff desires to sell milk "in all counties of New York State" the state court decision is not binding since state wide sales were not there at issue. As noted above, the complaint alleges in the second claim that the Milk Control Act is, by reason of the Commerce Clause, invalid both "on its face" and as "applied" by the Commissioner.

 But the Milk Control Act has not been "applied" to plaintiff to prohibit sales in any county except Richmond. The only application to plaintiff has been with respect to the proposed sales in Richmond County which are the subject of the state proceeding. Plaintiff even "agreed" that its application for a license to do business in New York, Bronx, Kings and Queens Counties should be deferred to "a later date." The Commissioner thus has made no determination as to how he will apply the Milk Control Act to plaintiff as to counties other than Richmond. Plaintiff ...


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