United States District Court, Southern District of New York
August 13, 1991
FARMLAND DAIRIES, FAIRDALE DAIRIES, INC. AND FAIRLAWN DAIRIES, INC., PLAINTIFFS,
RICHARD T. MCGUIRE, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF AGRICULTURE AND MARKETS, DEFENDANT. LEHIGH VALLEY DAIRIES, INC., JOHANNA FARMS, INC., JOHNSTOWN SANI-DAIRY, A DIVISION OF PENN TRAFFIC CO. AND TUSCAN DAIRY FARMS, INC., PLAINTIFFS, V. RICHARD T. MCGUIRE, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF AGRICULTURE AND MARKETS, DEFENDANT.
The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.
OPINION AND ORDER
Plaintiffs, New Jersey and Pennsylvania milk producers, bring
these actions for declaratory and injunctive relief under
42 U.S.C. § 1983 and the Commerce Clause of the United States
Constitution, Article I, Section 8, Clause 3. Defendant Richard
McGuire, Commissioner of the New York State Department of
Agriculture and Markets ("the Commissioner"), moves in both
actions pursuant to Rule 12(b)(3) of the Federal Rules of Civil
Procedure to dismiss for improper venue or, in the alternative,
to transfer these actions to the Northern District of New York
pursuant to 28 U.S.C. § 1406(a). For the reasons stated below,
defendant's motions are denied.
Plaintiffs Farmland Dairies, Fairdale Dairies, Inc. and
Fairlawn Dairies, Inc. (collectively "Farmland") are dairy
manufacturing companies which purchase raw milk from dairy
farmers in New York, New Jersey and Pennsylvania and process it
at their New Jersey plant. Farmland sells finished milk to East
Coast retailers including retailers in New York state. Lehigh
Valley Dairies, Inc. ("Lehigh") and Johnstown Sani-Dairy
("Johnstown") operate milk processing plants in Pennsylvania and
sell finished milk in New York. Tuscan Dairy Farms, Inc.
("Tuscan") processes milk at plants in New Jersey and New York
and distributes finished milk in New York.
On May 1, 1991 the New York State legislature enacted section 5
of Chapter 84 of the Laws of 1991, which, inter alia, amended
section 258-m of the New York Agriculture and Markets Law, to
provide that "the commissioner shall provide for and enforce a
mechanism for compensatory payments" to be paid on sales in the
state of New York of finished milk made from raw milk purchased
outside New York. Complaint (No. 91 Civ. 3642), Exh. A at 2. On
May 9, 1991 the Commissioner issued an Interim Price
Determination and Order
stating, "All milk produced outside New York State and
distributed within the State as Class I fluid milk shall be
subject to the application of a compensatory payment as the
Commissioner determines necessary to equalize cost for such milk
among licensed milk dealers." Id., Exh. B at 1.*fn1 The
Commissioner issued further orders on May 23 and 31, July 26 and
August 1, 1991 requiring that compensatory payments be made by
milk dealers including plaintiffs. Id., Exh. C; Wittenstein
Aff., Exh. C; Defendant-Commissioner's Memorandum of Law in
Support of Motion to Dismiss (No. 91 Civ. 3642), Exh. 2.
Since this is a case "wherein jurisdiction is not founded
solely on diversity," the newly-enacted version of
28 U.S.C. § 1391(b) (effective Dec. 1, 1990) provides that venue is proper
(1) a judicial district where any defendant resides,
if all defendants reside in the same state, (2) a
judicial district in which a substantial part of the
events or omissions giving rise to the claim
occurred, or a substantial part of property that is
the subject of the action is situated, or (3) a
judicial district in which any defendant may be
found, if there is no district in which the action
may otherwise be brought.
Plaintiffs rely on subdivision 2 of § 1391(b).*fn2
(No. 91 Civ. 3642) ¶ 2; Complaint (No. 91 Civ. 4574) ¶ 4.
The Commissioner argues that "a substantial part of the events
. . . giving rise to the claim" occurred in Albany because the
statute and orders establishing the system of compensatory
payments were enacted there. Alternatively, the Commissioner
argues that the events giving rise to plaintiffs' claims are
their marketing and distribution decisions which are made at
their plants in New Jersey and Pennsylvania.
In opposition, Farmland asserts that 95% of its milk sales
occur in New York City and the surrounding metropolitan area and
that virtually no sales are made in the Albany market. Goldman
Aff. ¶ 6. Lehigh asserts that 85% of its milk sales subject to
compensatory payments occur in this district. Plaintiffs'
Memorandum of Law in Opposition (No. 91 Civ. 4575) at 3. Johanna
Farms, Inc. ("Johanna Farms") asserts that 100% of its milk sales
subject to compensatory payments occur in this district, id. at
4, while Tuscan claims 50% of the milk it ships to New York is
sold in this district. Id. at 5. Neither Johanna Farms nor
Tuscan distribute any milk in the Northern District of New York.
It is "distribution" of milk in the state of New York which
triggers compensatory payments under the challenged statute and
regulations. Plaintiffs have demonstrated that their New York
milk distribution occurs primarily in this district. Thus a
substantial part of the events giving rise to plaintiffs' claims
occurs in this district.*fn3 Accordingly, venue in these actions
is proper in this district and defendant's motions to dismiss or
transfer are denied.
IT IS SO ORDERED.