[00:00:02] Speaker 05: Case number 18, issue 188, Humane Society of the United States at ELL v. Sonny Perdue, Secretary of the United States Department of Agriculture, Appellate for the National Court of Appeals of the County, Mr. Yellen for Appellate USDA, and Mr. Bassett for Appellate NPUC, and Mr. Penza for Appellate Humane Society of the United States. [00:00:42] Speaker 03: Before you begin, I don't know if you're here to hear that at the end of the argument, if you just stay where you are, we'd like to come down and greet you. [00:00:51] Speaker 03: With that, good morning and proceed. [00:00:54] Speaker 00: Good morning, Your Honors. [00:00:55] Speaker 00: I'm Louis Yellen from the U.S. [00:00:57] Speaker 00: Department of Justice. [00:00:58] Speaker 00: I'm here today on behalf of the U.S. [00:01:00] Speaker 00: Department of Agriculture. [00:01:03] Speaker 00: Your Honor, the government's limited appeal comes down to a simple proposition. [00:01:08] Speaker 00: The district court enjoined USDA from authorizing future payments based on USDA's valuation of the trademarks. [00:01:16] Speaker 04: Mr. Yellen, before you dive into the merits, could we talk about appellate jurisdiction? [00:01:22] Speaker 04: The government's injury here really seems to flow from the June [00:01:31] Speaker 04: notice, order, whatever it is, but you haven't appealed that. [00:01:38] Speaker 00: Your Honor, the government's injury flows from the court's interpretation of its injunction as prohibiting the termination payment. [00:01:48] Speaker 04: The reason why... Right, so your theory of appellate jurisdiction has to be that you appealed the April order [00:01:59] Speaker 04: and the district court's June minute order reflects a permissible interpretation of the original injunction. [00:02:09] Speaker 04: It's clarifying in that sense. [00:02:12] Speaker 04: And so your appeal of the April order brings before us the issue that you want to bring before us. [00:02:18] Speaker 00: That's exactly right, Your Honor. [00:02:20] Speaker 00: Another way to put the point is that the government notified in what we thought was an abundance of caution, the government's intent, USDA's intent, to authorize the termination payment. [00:02:33] Speaker 00: The court then, one could describe this as an enforcement of the district court's injunction. [00:02:39] Speaker 04: I understand that. [00:02:39] Speaker 04: There's no question the district court [00:02:42] Speaker 04: thinks, district court thought that the June order simply interpreted or restated what was already in the April order. [00:02:54] Speaker 04: But our cases on appealability seem to require us to independently review that determination. [00:03:05] Speaker 04: And I don't see how, I mean, [00:03:09] Speaker 04: see how you could characterize that as just a clarification for all of the reasons you give on the merits, which is you're talking about payments under the contract under section 1.3 to buy the asset and she's now talking about a payment under 1.7 [00:03:34] Speaker 04: not based on the 2016 review, but on precisely the opposite, not the decision to continue the payments, the decision to get out of the contract. [00:03:44] Speaker 00: That's right, Your Honor, but the June interpretation, the June explanation, effectively became the final judgment of the district court. [00:03:55] Speaker 00: And it would be the June decision that would trigger the requirement for the notice of appeal. [00:04:03] Speaker 04: But only if it permissively construes the April order, right? [00:04:09] Speaker 04: That's right, Your Honor, and the court gives deference to a district court's interpretation of... It gives a degree of deference, but we still review the interpretation for reasonableness. [00:04:20] Speaker 00: I think that's right, Your Honor. [00:04:23] Speaker 00: Sorry, I know that's right, Your Honor, but in this case, the district court, the June order addressed whether or not [00:04:36] Speaker 00: the April order encompassed a different matter. [00:04:41] Speaker 00: That is, encompassed a payment based on an authorization that had already been made. [00:04:47] Speaker 00: USDA informed the district court that it had already authorized a payment, and the question was whether... I understand, but that's a different issue, right? [00:04:56] Speaker 04: That's the question whether the February order covers payments that were authorized but not yet made. [00:05:06] Speaker 04: No, that's right, Your Honor, but... I don't see how that bears on the separate interpretive question whether the April order covers termination payments. [00:05:19] Speaker 00: That's a fair point, Your Honor, but in this context, we think that it's not so unreasonable for the district court to have interpreted its June order as encompassing the termination payment. [00:05:33] Speaker 00: in part because there was a dispute between the parties. [00:05:36] Speaker 00: The plaintiffs claimed that all along they had intended their claims to encompass the termination payment. [00:05:43] Speaker 00: The objection that the plaintiffs filed to the government's notice of its intent to authorize the termination payment [00:05:54] Speaker 00: argued that all along this had been implicit in its arguments and the district court accepted that explanation, that interpretation. [00:06:04] Speaker 00: So it's not so unreasonable for the court to have interpreted its injunction and issued this minute order that this court would have to deem that minute order so far out of bounds that it would not provide the court appellate jurisdiction. [00:06:21] Speaker 00: Now, we have merits arguments to be sure. [00:06:23] Speaker 00: We think that the district court made a significant error, but in light of the pleadings that were before the district court at the time, and in light of the plaintiff's arguments about the way in which the termination payment was encompassed within its arguments, the district court wasn't so far out of bounds as to create a separate decision that wouldn't be before this court. [00:06:48] Speaker 05: So if we assume, as you've argued, that the termination clause remained valid even after the district court's injunction and even after the minute order, I mean, the terms of the contract talk about a voluntary termination. [00:07:03] Speaker 05: You keep referring to it as a termination clause, but it's a very specific voluntary termination clause. [00:07:10] Speaker 05: I mean, looking at the language of it. [00:07:11] Speaker 05: And so I'm not sure why, after the district court's injunction of any payments, [00:07:17] Speaker 05: this would be classified as a voluntary termination. [00:07:22] Speaker 00: Oh, Your Honor, I think there is a simple answer to that question. [00:07:26] Speaker 00: The board may, could have reasonably unwisely decided not to terminate the contract. [00:07:32] Speaker 00: It would still have been obliged to make payments under the contract, but prohibited from doing so by the district court, and that would have opened it up to contract claims. [00:07:43] Speaker 00: Now, the district court, I think it's important in this context to note, did not invalidate the contract itself. [00:07:49] Speaker 00: It just prohibited payments under the contract. [00:07:52] Speaker 05: It made performance impossible, right? [00:07:55] Speaker 05: Prohibiting payments. [00:07:56] Speaker 05: I mean, so I'm not sure. [00:07:58] Speaker 05: I mean, the voluntary clause suggests a very different type of process, right? [00:08:04] Speaker 05: USDA gives written notice in advance. [00:08:06] Speaker 05: I mean, it's not contemplating the legal invalidity of the payments. [00:08:14] Speaker 00: No, I think that's fair, Your Honor. [00:08:15] Speaker 00: It's not contemplating legal invalidity, in part because it gives the Board complete discretion to terminate the contract at will. [00:08:24] Speaker 00: But I still think that it's important that the District Court did not pass on the validity of the contract and did not itself require the Board to terminate the contract. [00:08:35] Speaker 00: So there wasn't compulsion to terminate the contract. [00:08:38] Speaker 00: And even if the Board decided [00:08:41] Speaker 00: that the consequence of the district court's decision is that it had to terminate the contract. [00:08:48] Speaker 00: That doesn't mean that it didn't undertake the obligation under the contract to make a voluntary, excuse me, to make the termination payment. [00:08:59] Speaker 00: I'd like to address briefly the two arguments that plaintiffs present as alternative bases for this court's affirmance of the district court's decision here. [00:09:10] Speaker 00: One is the challenge to the district court's statute of limitations argument, and that issue turns on when plaintiffs' claim accrued. [00:09:20] Speaker 00: I'd like to give the court a simple hypothetical which I think demonstrates [00:09:23] Speaker 00: that the claim had to have accrued when the USDA authorized the contract and not when the board consummated the contract. [00:09:34] Speaker 00: The USDA authorizes the contract. [00:09:36] Speaker 00: The contract requires an immediate $3 million payment [00:09:40] Speaker 00: upon signature, upon consummation of the contract. [00:09:44] Speaker 00: No one doubts that immediately after the secretary authorized the contract, that plaintiffs could go to court and seek an immediate TRO to prevent [00:09:56] Speaker 00: the board from making that $3 million payment and expending what the plaintiffs would say is an illegal payment and illegal use of producer assessment funds. [00:10:07] Speaker 00: Now to put this into the Bennett v. Speer legal framework, the authorization of the contract was the consummation of agency decision and it did have legal consequences. [00:10:19] Speaker 00: The legal consequence was that the board had authorization to obligate [00:10:26] Speaker 00: producer assessment funds by entering into the contract. [00:10:32] Speaker 00: And in the context of this case, there was zero reason to doubt that the board was going to enter into this contract. [00:10:40] Speaker 00: And plaintiffs don't challenge that contention. [00:10:42] Speaker 00: They don't say that, you know, they may have reconsidered that decision. [00:10:46] Speaker 04: What do you do? [00:10:48] Speaker 04: Your position seems strong if you just look at the July contract. [00:10:55] Speaker 04: and then the September, I think, USDA on. [00:10:58] Speaker 04: But we also know in the record that it seems that the contract was subject to some further negotiations, changes, whatever it is, which seems to suggest that there must have been some later authorization by USDA. [00:11:24] Speaker 00: On the contrary, Your Honor, the administrative record contains one authorization and one authorization only, the September 13th authorization. [00:11:32] Speaker 04: I think Your Honor is... Sure, but is it USDA's position that the Board can enter into a contract, get approval, then make changes to the contract [00:11:52] Speaker 04: and not seek a new approval on the theory that the changes are minor? [00:11:58] Speaker 00: No, Your Honor. [00:11:59] Speaker 00: USDA's position is any change to a contract requires USDA authorization. [00:12:05] Speaker 04: Require a subsequent approval. [00:12:07] Speaker 00: Authorization, exactly, and to be clear. [00:12:10] Speaker 04: And we have a record document, it appears to be a later contract, and authenticity's not in dispute, which says that the [00:12:23] Speaker 04: otherwise seemingly final July contract was subject to further negotiations as late as September. [00:12:31] Speaker 00: And to be very clear, that other contract had nothing to do with the purchase agreement. [00:12:35] Speaker 00: It only said that the parties... It said that the purchase agreement was being... They were contemplating, they were negotiating future further agreements. [00:12:43] Speaker 00: There is no evidence that the parties decided to request USDA authorization for any further changes to the contract. [00:12:55] Speaker 00: And so it's possible that they were negotiating future changes. [00:12:59] Speaker 00: If they were negotiating them, and if they had decided to pursue those changes, it would have been the board's obligation to go to USDA to get further authorization. [00:13:10] Speaker 00: It is a permissible inference that they, in light of the absence of any further authorization in the record, it is a permissible inference that in fact, for whatever reason, they decided not to pursue whatever terms they were contemplating. [00:13:26] Speaker 04: And remind me, the one other [00:13:29] Speaker 04: piece of record evidence that bears on this is some minutes from a board meeting where they make reference to these ongoing negotiations? [00:13:40] Speaker 00: I believe that's right. [00:13:41] Speaker 00: I don't have the record citation for you. [00:13:44] Speaker 04: And you have the same answer, which is? [00:13:45] Speaker 00: Exactly, there's zero evidence that the parties agreed and that the board sought authorization from the district court. [00:13:54] Speaker 00: Excuse me, from USDA. [00:13:56] Speaker 00: I had one more point about the lobbying argument. [00:14:00] Speaker 00: Thank you, Your Honor. [00:14:05] Speaker 00: There is zero evidence in the record and plaintiffs point to no evidence that USDA in authorizing either the agreement or any of the subsequent purchase payments did so for lobbying purposes. [00:14:18] Speaker 00: Now they do claim, and we don't concede the accuracy of their characterization, they do claim that there is evidence that the board was working with the council [00:14:30] Speaker 00: to allow the council to engage in lobbying. [00:14:34] Speaker 00: But the challenge here in the complaint, pages 71 to 75, is to the USDA's authorization of the contract and of the purchase payments. [00:14:46] Speaker 00: And again, there is a statutory and regulatory prohibition on the use of funds for lobbying purposes. [00:14:55] Speaker 00: And in the absence of any evidence that USDA, in making those authorization decisions, was intending to permit the funds to be used for lobbying purposes, one must assume, this court must assume, that the agency was acting consistent with the law. [00:15:19] Speaker 00: Thank you, your honor. [00:15:31] Speaker 04: Good morning. [00:15:48] Speaker 04: start you where I started government council, which is on appeal ability. [00:15:54] Speaker 01: Yes. [00:15:55] Speaker 04: So your client is in a somewhat stronger position than the government to the extent you took up both the April order and the June order. [00:16:07] Speaker 01: That's correct, Your Honor. [00:16:09] Speaker 04: And so you have a theory. [00:16:11] Speaker 04: If we think of the June order as a new injunction, you have a good theory of appealability. [00:16:18] Speaker 04: If we think of it as a permissible interpretation of the April order, you have a good theory of appealability. [00:16:25] Speaker 04: But what if we think of it as just kind of a nullity? [00:16:31] Speaker 04: It has no more or less legal effect than if [00:16:34] Speaker 04: the judge had given a speech and said, gee, it's a really good thing that I stopped the termination payment. [00:16:43] Speaker 04: Wouldn't the upshot of that be you've appealed the April order, but the April order doesn't address the termination payment? [00:16:55] Speaker 01: And then our arguments would still stand that the summary judgment order does not prohibit the termination payment. [00:17:02] Speaker 01: What it prohibits are [00:17:04] Speaker 01: authorizations, approvals, and payments on the basis of the 2016 review, which the termination payment is not. [00:17:11] Speaker 01: So our argument wins regardless of whether the... What's our basis for appellate jurisdiction? [00:17:20] Speaker 01: The basis for appellate jurisdiction of the original summary judgment order? [00:17:26] Speaker 04: If we think that the June order has no legal effect, it's not an injunction. [00:17:35] Speaker 04: It's not an injunction and it's not a reasonable clarification of the April order. [00:17:42] Speaker 01: I may not be understanding you that the April order was a final appealable order. [00:17:52] Speaker 05: All right. [00:17:53] Speaker 01: Sorry, I'm not understanding. [00:17:55] Speaker 05: I think perhaps maybe what Judge Katz is saying, why is the limitation on paying the termination payment properly appealed to this court? [00:18:04] Speaker 04: Right. [00:18:08] Speaker 01: to the extent that plaintiffs are taking the position that the original summary judgment order did enjoin the termination payment, then that is the basis. [00:18:21] Speaker 04: In other words, we say that the April order means what it says. [00:18:27] Speaker 04: It doesn't mean what the district court thought. [00:18:31] Speaker 04: And you appeal the April order, and you can make your broad argument that [00:18:38] Speaker 04: None of these decisions were reviewable because they were committed to agency discretion by law, which is an argument that attacks the conclusion regarding the continuation payments, but none of that lets you get into the termination payment, the issue about the termination payment. [00:19:02] Speaker 01: I think that the issue of standing actually precludes [00:19:08] Speaker 04: I understand, but different, let's assume we think they're standing. [00:19:21] Speaker 01: Again, I fear that I'm not understanding what your question is getting at. [00:19:28] Speaker 01: If the original summary judgment order didn't enjoin the payment, then the board could have made the payment. [00:19:39] Speaker 01: which they weren't able to do because it was enjoined by the minute order and we interpreted the minute order as modifying the injunction because it changed the legal relationship of the parties and because the original order, originally the termination payment wasn't challenged, the contract's overall validity wasn't challenged and so [00:20:03] Speaker 01: We did not interpret the district court's original summary judgment order as encompassing that. [00:20:08] Speaker 01: But since the district court made that separate minute order, which did modify it, we feel like it is independently appealable. [00:20:18] Speaker 01: So as I started to say, we feel like the court need not engage and resolve these merits issues, and indeed cannot, because no plaintiff has Article III standing, which deprives the court of jurisdiction to decide any merits question. [00:20:39] Speaker 01: In 2015, when a panel of this court reversed the district court's holding that no plaintiff had standing, [00:20:47] Speaker 01: It explained how Mr. Dillenberg's economic injury theory of standing could move forward if he had facts to support it. [00:20:56] Speaker 01: Said the board's allegedly unlawful overpayments for an advertising campaign does not use divert funds from other promotions. [00:21:03] Speaker 01: Because of that, pork demand is lower and thus the price at which pork producers can sell their hogs is lower than it would be if the board were spending those funds on legitimate promotions and other demand enhancing campaigns. [00:21:15] Speaker 01: So it set out four components of this roadmap to standing. [00:21:19] Speaker 01: One, that the board doesn't use the trademarks. [00:21:22] Speaker 01: Two, that leads to a lower demand for pork. [00:21:25] Speaker 01: Three, that in turn leads to a lower price at which pork producers can sell their hogs. [00:21:30] Speaker 01: And four, that there's other promotions that would therefore increase the price of pork. [00:21:35] Speaker 01: When it was remanded to the district court and moved on to the summary judgment stage, Mr. Dillenberg was required to provide facts in support of his standing theory. [00:21:44] Speaker 01: And the only evidence produced. [00:21:45] Speaker 04: Maybe yes, maybe no. [00:21:47] Speaker 04: I mean, it depends on how broadly our prior opinion sweeps. [00:21:55] Speaker 04: And there's language in our prior opinion suggesting that general economic reasoning [00:22:04] Speaker 04: gets you from I think your step two to your step four. [00:22:11] Speaker 04: And if that's sort of more like a legal principle about standing than a pleading principle about what you need on a motion to dismiss, our ruling might be binding. [00:22:30] Speaker 01: Well, at the motion to dismiss stage, which the previous, that was the stage at which the previous panel ruled, not only did the panel have to assume the truth of the allegations, but they also had to draw all assumptions in favor of the plaintiff. [00:22:44] Speaker 01: And also at that stage, the plaintiff had alleged, Mr. Dillenberg had alleged an actual reduced return on his poor checkoff investment, which he's now abandoned at the summary judgment stage. [00:22:56] Speaker 01: The declaration in support of his standing submitted at summary judgment, [00:22:59] Speaker 01: is completely silent on that point. [00:23:01] Speaker 01: So what the key allegation in the complaint that the panel had to assume was true has now been withdrawn. [00:23:07] Speaker 01: He's no longer claiming this reduced return on investment. [00:23:09] Speaker 04: It's a little ambiguous on that point. [00:23:13] Speaker 04: He doesn't have the line about return on investment, but he makes reference to direct economic benefit of the lawful promotions and [00:23:25] Speaker 04: In the context of this case, given the history and what the district court said, what we said on the prior appeal, why wouldn't we charitably construe that to mean he suffered a pocketbook injury? [00:23:43] Speaker 01: Number one. [00:23:45] Speaker 01: that just the flat statement that he's been deprived of the economic benefit of lawful promotions is basically saying that he believes that a statutory violation occurred. [00:23:56] Speaker 01: The statute requires lawful promotions. [00:24:00] Speaker 01: This promotion wasn't lawful, so therefore I was deprived of what I'm entitled to under the statute. [00:24:05] Speaker 01: But a panel of this court in 2016 in Hancock v. Urban Outfitters interpreting the Supreme Court's decision in Spokio [00:24:14] Speaker 01: which held that there must be a concrete and actual injury even in the context of a statutory violation. [00:24:21] Speaker 01: So same circumstances there as here in the Hancock v. Urban Outfitter case, two plaintiffs [00:24:29] Speaker 01: went to retail establishments when they made their purchases, they were asked for their zip codes, they claimed in violation of two DC consumer protection statutes. [00:24:38] Speaker 01: So there, like here, it's undisputed that they were statutory beneficiaries of the statutes that they claimed were violated. [00:24:46] Speaker 01: They were consumers, [00:24:47] Speaker 01: the statutes were meant to protect consumers and they claim that their rights were violated because the statute was supposed to provide them this benefit of protecting them from being asked for their zip codes and it was violated because they were asked for that information and the court found that they lacked Article 3 standing because they couldn't allege any concrete injury that flowed from the result of that violation and the same thing here in this case Mr. Dillenberg doesn't claim that he has [00:25:14] Speaker 01: he can't sell as many pigs, or the price for which he can sell his pigs has gone down, or that his operations have been affected in any way, that he's had to lay off employees, that he's had to reduce operations, that he can't meet his targets. [00:25:28] Speaker 01: Nothing. [00:25:28] Speaker 01: We have no idea what the actual concrete economic injury is. [00:25:35] Speaker 01: And by asking and by arguing that it's the law of the case that Mr. Dillenberg has standing on the basis of the panel's 2015 decision, the plaintiffs are making the exact error that led to the Supreme Court's decision in Lujan versus Defenders of Wildlife reversing [00:25:53] Speaker 01: a finding of standing. [00:25:55] Speaker 01: There, like in this case, the district court had originally granted the government's motion to dismiss for lack of standing. [00:26:02] Speaker 01: Then the Eighth Circuit reversed, and on remand, when it moved forward to the summary judgment stage, the district court denied the motion on the ground that the Eighth Circuit had already determined standing. [00:26:12] Speaker 01: The Eighth Circuit affirmed, and then the Supreme Court reversed, holding that the plaintiffs hadn't met their burden of establishing standing at the summary judgment stage. [00:26:20] Speaker 04: So assuming- Lujan was pre-twombly Iqbal, right? [00:26:24] Speaker 01: Yes. [00:26:24] Speaker 04: So the rule at the time was that you didn't need to make virtually any allegations on a 12b stage. [00:26:32] Speaker 04: You could say something wholly general and we would assume all of the subsidiary details. [00:26:39] Speaker 04: But now the pleading rule is that you need to set forth specific facts and the courts only make reasonable inferences and that's the context in which the [00:26:54] Speaker 04: prior appeal was before us and we said good enough and that doesn't sound hugely different from a summary judgment posture where we draw all reasonable inferences in favor of the non-moving party. [00:27:12] Speaker 01: The summary judgment standard from Lujan still stands and it still requires specific facts. [00:27:18] Speaker 01: There are no specific facts in Mr. Dillenberg's declaration. [00:27:23] Speaker 01: And again, he's withdrawn this allegation about the reduced return on investment. [00:27:28] Speaker 01: He's not even claiming any of those elements in the previous panel's roadmap. [00:27:33] Speaker 01: I don't know how he can say that he has an economic injury when he can't claim – if he had one, he should be able to say it. [00:27:46] Speaker 03: Thank you. [00:27:59] Speaker 02: I haven't asked for rebuttal, and I'm not sure that we went for the conditional cross appeal, but if that arises, then there's a minute to respond. [00:28:13] Speaker 02: I'll start with the termination provision and Judge Rao's question about the tax, because [00:28:22] Speaker 02: The way I read it, I don't get past the first line before it says, they may elect to terminate obligations to pay the unpaid balance. [00:28:33] Speaker 02: The district court terminated all unpaid balance. [00:28:38] Speaker 02: She terminated all further payments. [00:28:40] Speaker 02: There's nothing for them to elect to terminate. [00:28:42] Speaker 02: And that's the specific language of the clause. [00:28:46] Speaker 04: She didn't terminate the contract. [00:28:49] Speaker 04: She said that [00:28:52] Speaker 04: Approvals of continuing payments based on the 2016 review were arbitrary and capricious. [00:29:03] Speaker 04: It's very different. [00:29:05] Speaker 02: And she enjoined all further payments? [00:29:08] Speaker 04: Based on the 2016 review. [00:29:11] Speaker 04: Right. [00:29:11] Speaker 04: So going forward? [00:29:12] Speaker 04: It would be open to the agency to make a new record. [00:29:17] Speaker 02: Well here, well let me point, let me, I think we have one, there are two issues that arise from that. [00:29:26] Speaker 02: And the first is textual, the textual issue that I raised to go back to this, which is that if she terminated any further obligations to make payments, that's the only thing that this, that the text of this [00:29:42] Speaker 02: of this termination clause refers to. [00:29:47] Speaker 02: It doesn't refer to termination of the agreement. [00:29:49] Speaker 02: It doesn't refer to a termination payment. [00:29:51] Speaker 02: It says you can issue a notice to terminate any obligation to pay the unpaid balance. [00:29:56] Speaker 02: So she eliminated any obligation to pay the unpaid balance. [00:29:59] Speaker 02: Now, if they want to, we've just been notified they're going to try and make a new contract, and if they can justify that, that's a different issue than if they still have an obligation to pay the unpaid balance. [00:30:11] Speaker 02: The second issue has to do with this idea that there is still an agreement out there that has been where they obligated, they made this obligation 20 years ago on a federal contract and it just sleepily bypassed all the annual approvals and extensions and now it's an obligation on the government 20 years later. [00:30:31] Speaker 02: But we've talked about it as it came up in the briefs, one of the key elements that [00:30:37] Speaker 02: that protects the public funds and the nature of public contracts is that each year, both through the Empty Deficiency Act and the AMS guidelines requirement that all contracts have extensions tied to the budget year, in order to protect... Which seems to be why the contract, each yearly payment has to be separately authorized. [00:31:01] Speaker 04: Right. [00:31:02] Speaker 04: And the contract incorporates this odd [00:31:06] Speaker 04: termination mechanism with precisely so that they can get out if [00:31:14] Speaker 04: they end up having a problem with authorizations and Anti-Deficiency Act and such. [00:31:19] Speaker 02: So yeah, and I think that's correct, and so legally I think the way the courts have dealt with how that technically works, and I think how the judge was reviewing it, and in cases we cited I think lighter in our briefs, but there are others, that each year the decision [00:31:39] Speaker 02: is to either terminate or extend and re-adopt the terms of the contract. [00:31:47] Speaker 02: And what in effect the judge did in 2016 when she said, your decision to extend the contract was arbitrary and capricious and set aside, that means that the extension and re-adoption is invalidated. [00:32:04] Speaker 02: That was set aside. [00:32:05] Speaker 02: That means that contract was not extended. [00:32:07] Speaker 04: That means they have to terminate. [00:32:09] Speaker 02: Oh, it means the contract ended because it was not extended. [00:32:13] Speaker 02: Because that's what the Anti-Deficiency Act and the guidelines operate to not allow a government to be obligated beyond a fiscal year until funds are available and appropriation is made and then the contract is readopted. [00:32:28] Speaker 02: If it's not extended and readopted, then it ends. [00:32:32] Speaker 02: Now they're going to try to make a new one. [00:32:35] Speaker 04: But you cast your claims [00:32:37] Speaker 04: We're talking about this deemed count four, which is a little bit mysterious. [00:32:42] Speaker 04: But by analogy to the claims that you did make, what you said was it was unlawful to, and that's out of the case on timeliness grounds. [00:32:54] Speaker 04: And then you said each subsequent authorization was unlawfully approved. [00:33:03] Speaker 04: And what should have happened [00:33:05] Speaker 04: was that the authorization shouldn't have been made and the government should have terminated. [00:33:11] Speaker 04: That's right. [00:33:13] Speaker 04: You didn't say that the government would be violating the law by doing just that, which is not authorizing the new payment and then terminating the contract. [00:33:28] Speaker 02: I'm sorry. [00:33:30] Speaker 04: I think I followed, but if I'm confused then... The way you cast this was not that the termination clause is unlawful or can't be invoked if the government has to get out of the contract for legal reasons. [00:33:49] Speaker 04: The way you cast this is the authorization was improper and therefore they should have invoked termination. [00:33:59] Speaker 02: particularly in Counts 2 and 3, when pork the other white meat was replaced, the argument is it was arbitrary and capricious to extend and readopt the contract terms. [00:34:11] Speaker 04: And by analogy, under the deemed Count 4, it was arbitrary and capricious to authorize the, what was it, the 2008 term payment, and therefore [00:34:25] Speaker 04: just extrapolating from how you frame the other counts, and therefore they should have invoked the termination procedure in 2018. [00:34:34] Speaker 02: Right, and I agree with that framework that they should have, so then the legal challenge [00:34:45] Speaker 02: is that it was arbitrary and capricious to extend and re-adopt, and that is set aside. [00:34:50] Speaker 02: And if the ability to extend a federal contract into another fiscal year is set aside, according to Leiter, the contract ends. [00:35:01] Speaker 02: And that's the way that the public contracts are guaranteed because otherwise what you end up having is a termination clause such as this or a claim that it floats on continuously. [00:35:15] Speaker 02: The termination clause said, well, if this contract is found to be arbitrary and capricious at any point, then we'll agree to pay [00:35:23] Speaker 02: $20 million for every remaining dollar. [00:35:25] Speaker 02: So they can't get around that. [00:35:27] Speaker 04: But the upshot of the argument you just made is that that hypothetical termination clause was on lawful when enacted. [00:35:42] Speaker 04: And you don't have that argument here, because you did challenge the contract as enacted, and the court held that to be time barred. [00:35:50] Speaker 02: Well, what we challenged was the approval of the entry into the contract. [00:35:55] Speaker 02: But I don't think we ever challenged that it had a termination agreement or that the termination agreement was lawful to include in contracts. [00:36:04] Speaker 02: In fact, I think that they required. [00:36:06] Speaker 04: Which just strengthens the point that your case has not been about whether the termination process itself is independently illegal. [00:36:20] Speaker 02: Well, so I think there are two issues. [00:36:23] Speaker 02: One is whether they now have the right to invoke this termination clause. [00:36:28] Speaker 02: And the other is whether or not it was arbitrary and capricious to extend the contract when they have the ability to get out. [00:36:34] Speaker 02: So I'm examining what happened in 2011 and 2012 when the secretary had to decide whether or not to re-adopt and extend the contract. [00:36:45] Speaker 02: and having the option of a lawful termination, that it was not arbitrary and suspicious and that extension should be set aside, which ends the contract at that point. [00:36:54] Speaker 02: They can renegotiate on non-arbitrary terms if they think that they can get into it, but it is a legal matter. [00:37:00] Speaker 02: that ends the contract. [00:37:02] Speaker 02: So I don't think at any point we challenge the termination agreement. [00:37:07] Speaker 02: I don't think there's a live termination agreement now to end because in 2016, what the court set aside, the court set aside the 2016 decision to extend and re-adopt the contract's terms and extend and re-adopt the termination agreement. [00:37:22] Speaker 02: Essentially, [00:37:24] Speaker 02: Legally, what happens is the contract terminates because she set aside the extension. [00:37:30] Speaker 02: There is no termination agreement to invoke. [00:37:35] Speaker 02: And I think it's a separate issue to say whether we find that. [00:37:42] Speaker 04: We're in APA review. [00:37:44] Speaker 04: Yeah. [00:37:46] Speaker 04: So you need a specific agency action before the court. [00:37:51] Speaker 04: Right. [00:37:52] Speaker 04: And the only thing the court can do is set aside specific agency action found to be unlawful. [00:37:58] Speaker 04: And we're not supposed to do anything else. [00:38:01] Speaker 04: So this comes up, the specific agency action is authorization of a payment that is consideration under section 1.3 of the contract. [00:38:18] Speaker 04: And the district court in APA review says that [00:38:21] Speaker 04: is unlawful, period, full stop. [00:38:25] Speaker 04: That doesn't tell you anything about the separate payment contemplated under Section 1.7 of the contract under different circumstances. [00:38:38] Speaker 02: Well, so at the very end there, I think a new question came up about whether or not this really is a separate payment or whether it's just another payment in consideration of the year of use. [00:38:47] Speaker 04: I get that. [00:38:49] Speaker 04: Your best argument, in my view, is this isn't really something different. [00:38:53] Speaker 04: This is just one more year. [00:38:55] Speaker 02: Yeah. [00:38:56] Speaker 02: I get that. [00:38:57] Speaker 02: And we talk about that in the Greece and why that is, and also the intro language. [00:39:02] Speaker 04: But here you were making a different argument. [00:39:04] Speaker 02: But yeah, I think this one is connected to what the, well, to speak just for a moment about what was deemed to be count four. [00:39:17] Speaker 02: What was represented, including, and we point to it in our briefs, including in the [00:39:22] Speaker 02: in the summary judgment briefs of the government was that there is no [00:39:29] Speaker 02: issue prior to the 2016, no injury plaintiffs can suffer that depended, that was consumed by the 2016 agreement. [00:39:42] Speaker 02: And that, going forward, everything related to this contract, the only injury, the only squandering of money that they could suffer, would relate to this court's decision on the 2016. [00:39:53] Speaker 02: Under the 2016 review, which is... [00:40:00] Speaker 02: My point about the extension and readoption, just to, I think, return to that for a minute, because the way I see the legal effect, I don't have any problem with the contract having a termination agreement. [00:40:14] Speaker 02: If the termination agreement did have something that said, hey, [00:40:17] Speaker 02: If this court finds this contract arbitrary and capricious, we will pay the unpaid balance. [00:40:25] Speaker 02: Then I would have an issue with the lawfulness of the termination agreement. [00:40:28] Speaker 02: So I don't think that there was any problem with having a termination agreement. [00:40:32] Speaker 02: In fact, I think the guidelines and federal spending laws really require that. [00:40:38] Speaker 02: But the way I think the legal effect of the judge's ruling is each year when the secretary approves and re-adopts a contract and extends that, it re-adopts all the terms. [00:40:51] Speaker 02: But if the court says that the extension was [00:40:58] Speaker 02: was set aside, the extension was unlawful and set aside, the contract ends. [00:41:03] Speaker 02: It does not get extended or re-adopted. [00:41:06] Speaker 02: So the contract terminated, the contract terminates at the end of each fiscal year and that's required by the Anti-Deficiency Act so we don't over obligate public funds. [00:41:16] Speaker 04: Didn't the district court explicitly contemplate that there might be future payments under this contract that could be justified on a [00:41:27] Speaker 04: better record for the government? [00:41:31] Speaker 02: I mean, my understanding of what she wrote was, or her findings and what she was saying was that there would be, she was commenting, I believe, on what she called the admittedly thin administrative record prior to 2016. [00:41:49] Speaker 02: But she did point out, particularly in footnote 23 and other areas of the brief, the real problems that weren't dealt with in this deal. [00:42:00] Speaker 02: So, but what she essentially said was that all injury would be resolved by my ruling on this. [00:42:08] Speaker 02: Now, if they think that they can modify it and try and go back and make a new case for the district court and then later adopt, you know, back ratify a contract, [00:42:25] Speaker 02: I don't think they're going to try that, but I think that they can't get into the we're going to extend the contract beyond the fiscal year if that extension was arbitrary. [00:42:36] Speaker 05: Do you think that that is permissible under the district course injection, right? [00:42:40] Speaker 05: They enjoin from approving any future payments based on the 2016 review, right? [00:42:45] Speaker 05: And so if there was another review, right, with different facts, as Judge Katz has suggested, could they then resume making payments under the contract? [00:42:54] Speaker 02: My perspective, no, that would be unlawful because that contract has expired. [00:42:59] Speaker 02: When it expired at the end of the fiscal year. [00:43:02] Speaker 05: But the district court doesn't say that they are terminating the contract as a whole. [00:43:06] Speaker 02: No, she didn't say that, but she did raise the anti-deficient at the hearing. [00:43:11] Speaker 02: And our discussion with her throughout was that if she [00:43:20] Speaker 02: prohibits extending the contract further, that would end. [00:43:23] Speaker 02: She doesn't need to say, I specifically terminate the agreement because of the nature of the way federal spending laws work and appropriations and obligations. [00:43:32] Speaker 02: What she's saying is, if I don't allow them to extend it beyond 2016, then it terminates. [00:43:44] Speaker 02: You know, I don't think that they necessarily would be barred from trying to enter a new contract, although I think they're going to have problems based on the facts of this one. [00:43:54] Speaker 02: But under the settlement agreement, I think that they certainly can. [00:43:58] Speaker 02: But the guarantee that producers had and the concern that producers had and what has [00:44:06] Speaker 02: been painfully frightening to producers throughout these check-off programs were the issues that the Supreme Court dealt with in 2001 and 2005, and that is they're being compelled to pay into this system. [00:44:21] Speaker 02: And the only way that this program remains constitutional is if it's controlled entirely by the government and the funds aren't squandered or transferred to a private entity to support their speech. [00:44:37] Speaker 02: So we walk a very fine constitutional line. [00:44:39] Speaker 02: So I think what the concern about, so when the settlement came about, because producers had voted to end the pork checkoff in a referendum, [00:44:50] Speaker 02: And the secretary said, it will go on, but we will promise you. [00:44:53] Speaker 02: We will promise you that all dealings between the board and MPPC will be at arm's length and business-like. [00:45:02] Speaker 02: So if they want to do more contracts, they at least have to make that record. [00:45:07] Speaker 02: They have to make that record that can be justified, because that's the only protection that producers have. [00:45:12] Speaker 02: And we talked about in the first case was that they at least have the right to effective [00:45:19] Speaker 02: reasonable uses of promotional uses of the funds. [00:45:24] Speaker 05: Is the constitutional problem you're referring to a non-delegation problem? [00:45:27] Speaker 05: What is the constitutional problem? [00:45:30] Speaker 02: Well, it arises with the, it's tied into the issue of whether or not this money is being [00:45:42] Speaker 02: given to a private entity to make determinations on its own about what messaging and how to use it and whether it's in lobbying. [00:45:52] Speaker 02: In 2001 in the United Foods case the court said the court [00:45:59] Speaker 02: The government speech argument wasn't presented until it got to the Supreme Court and the court said... Yeah, you're talking about the compelled speech case. [00:46:07] Speaker 02: Yeah, the compelled subsidization. [00:46:09] Speaker 04: I'm sorry, I lost the train, but how is that relevant to the issues before us? [00:46:15] Speaker 02: Because what we talked about was the underlying, why it was so important for the contracts between [00:46:25] Speaker 02: not just the board and MPPC, but all of the checkoff boards and private trade associations to ensure that we're not paying $60 million for a trademark that's worth $30 million when it's really in order to get money over to a private entity. [00:46:45] Speaker 04: You're talking about what you see as misuse of funds. [00:46:49] Speaker 04: You're not talking about whether that speech is government or private. [00:46:53] Speaker 02: Well, I think where that ties, where that connects, is if the misuse of funds essentially amounts to the government [00:47:14] Speaker 02: abdicating or delegating or giving control over the messaging to a private entity. [00:47:22] Speaker 02: That's when you get back into the unconstitutional issues that were a concern in United States. [00:47:31] Speaker 02: And my point to tie it back to Judge Rao, which I might have gotten off track, but the reason that when you asked about whether they could renegotiate, [00:47:41] Speaker 02: They can enter contracts with them, and if they think they can justify this with a proper valuation and get a new contract, they can do that, but it has to be one that's done at arm's length so that producers can reassure. [00:47:55] Speaker 02: Right now, the only thing producers have is this trademark that was overpriced and not valued. [00:48:04] Speaker 03: Mr. Pencher, you would have no way of knowing it because your clock is out, at least it is on this side, but your time is up. [00:48:11] Speaker 03: But go ahead with some more questions. [00:48:14] Speaker 04: Could I just ask about standing? [00:48:16] Speaker 03: Yeah. [00:48:16] Speaker 04: So usually when we move from a motion to dismiss to a motion for summary judgment, the plaintiff makes a fuller showing. [00:48:28] Speaker 04: Here, it seems like you made a lesser showing. [00:48:33] Speaker 04: You have a very threadbare affidavit, which largely just [00:48:39] Speaker 04: parrots the allegations in the complaint, except that it seems to pull back on the key allegation about a pocketbook injury from return on investment. [00:48:56] Speaker 02: I think, let me talk about the distinction, and particularly with this Bokia argument, [00:49:06] Speaker 02: These are unique programs. [00:49:08] Speaker 02: These are different than, say, a procedural violation or a consumer protection statute or a general protection statute that's designed to protect against harm, where if a zip code has gotten wrong or the wrong receipt is given, you're not necessarily harmed. [00:49:24] Speaker 02: And that, the court says, is not a concrete harm. [00:49:29] Speaker 02: The first panel said in this case was the failure to provide lawful and effective promotions results in a failure to provide an economic benefit. [00:49:41] Speaker 02: And it's an economic benefit that he's compelled to pay for. [00:49:43] Speaker 02: He's not getting the effective promotional services that the law requires and whatever downstream effects come from this. [00:49:52] Speaker 04: You can't say that the maladministration [00:49:57] Speaker 04: of a federal program is the injury that gives him standing. [00:50:03] Speaker 04: And that's not the injury we recognized. [00:50:06] Speaker 04: It has to be that the mal-administration of the federal program causes him the classic Article III injury, which is when he sells the pigs, he's not getting as much money as he otherwise would, or he can't sell as many pigs, or whatever it is. [00:50:24] Speaker 02: Well, the way I understood the first panel and the way I read this argument is that if he was talking about damages and wanting to collect for specific losses, that's a different thing. [00:50:40] Speaker 02: But for Article 3, [00:50:42] Speaker 02: What he's showing is, look, I'm entitled to these promotional services that are designed to enhance the market base. [00:50:48] Speaker 02: In fact, I'm paying for them. [00:50:50] Speaker 02: I'm not getting them. [00:50:51] Speaker 02: If I'm paying into the social security system and not getting my check, or if I'm paying privately, if someone purchases radio ads and doesn't get the ads run, if it was damages, I'd have to prove how much [00:51:06] Speaker 02: how much I've lost. [00:51:08] Speaker 02: But for Article 3, not getting the product I've paid for and being deprived of whatever downstream returns they would have produced for me is enough to show at least a threat of injury. [00:51:22] Speaker 04: But your client isn't entitled to any specific kind of advertising in the way that the Social Security beneficiary is entitled to the check. [00:51:33] Speaker 02: Well, I think I [00:51:36] Speaker 04: I disagree to the... You're just saying the program is being run badly. [00:51:44] Speaker 04: That's either a generalized grievance about how the executive is doing business, or if you say, well, no, we're different because we're the intended beneficiaries of the program. [00:51:56] Speaker 04: That's a statutory beneficiary argument, which seems no good after Spokio. [00:52:01] Speaker 02: So the distinction I see is if I had said that the assessments were being collected in the wrong way, [00:52:10] Speaker 02: And he's entitled to have them collected by check instead of credit card or instead of online. [00:52:17] Speaker 02: That would be a simple programmatic violation that I think would not, just because he's a statutory beneficiary, he and other producers are entitled to receive the promotional services. [00:52:30] Speaker 02: If there's just a procedural violation, just that the program is being run badly, [00:52:34] Speaker 02: I think that that type of an injury would be problematic. [00:52:39] Speaker 02: But what he's alleging is I and the other producers who are being compelled to pay for this program are not getting the lawful and effective promotional services. [00:52:49] Speaker 02: And so we have to obviously get into the merits to prove that they're not being given. [00:52:53] Speaker 02: But what he says is I'm entitled to receive promotional services because that's why I'm paying you. [00:52:59] Speaker 04: And that's not the injury that we recognized in the previous appeal. [00:53:04] Speaker 04: The injury that we recognized is downstream from that, which is the impact on the pig farmer's bottom line. [00:53:16] Speaker 02: I think that then you get to Clinton v. New York and other cases that said, okay, look, we can apply, we credit the laws of basic economics. [00:53:27] Speaker 02: That's not what changes between the pleading stage and the summary judgment stage. [00:53:32] Speaker 02: The basic laws of economics to show harm [00:53:36] Speaker 02: like in competitive injury cases and others. [00:53:39] Speaker 02: What changes is the facts to which we apply them. [00:53:41] Speaker 02: So we have to show that he was someone who was entitled to these promotional benefits, who didn't get them. [00:53:47] Speaker 02: And if he doesn't get the effective promotions that were designed to enhance the marketplace, then we can show that by just basic economics, you don't get the ads, you don't get the opportunity for returns. [00:54:01] Speaker 04: Right. [00:54:02] Speaker 04: But the character of the government [00:54:05] Speaker 04: action in those cases is different. [00:54:08] Speaker 04: It's the government exercising sovereign power to restructure markets. [00:54:15] Speaker 04: And right, if they designate a forest twice the size of New Jersey as off limits for timber harvesting, will allow basic economics to support a conclusion that that's gonna harm timber farmers. [00:54:32] Speaker 04: That seems different from what we have here where all the government is doing. [00:54:39] Speaker 04: What you say they should have been doing is just adding their voice to the marketplace of speech. [00:54:48] Speaker 04: And if we take your allegations, if we take your merits allegations as true, which I think we have to for standing purposes, what you say they're actually doing [00:55:01] Speaker 04: is paying to lobby, which for all we know is a more effective way of propping up pork prices. [00:55:11] Speaker 02: Well, again, let me respond directly to your question and then talk about the implication. [00:55:22] Speaker 02: Again, if we're measuring that they may be engaging in promotional lobbying that's more effective, [00:55:32] Speaker 02: The only thing that producers have in this case is that we're guaranteed to get a value, that we're guaranteed to get a trademark for $60 million. [00:55:45] Speaker 02: What was or might be done outside by a private entity is it may or may not ultimately be something that [00:55:59] Speaker 02: that they think is helpful. [00:56:01] Speaker 02: But what producers are entitled to is this title. [00:56:07] Speaker 02: You can't convert the funds over to a private entity to decide what lobbying to do and say, well, this benefits them. [00:56:13] Speaker 02: Because one, you run into a First Amendment issue. [00:56:18] Speaker 02: What all the producers know is, hey, we're being promised this trademark. [00:56:22] Speaker 02: If they want to contract with MPPC for lawful [00:56:26] Speaker 02: activity, that's fine. [00:56:30] Speaker 02: But they can't just say, in the guise of a trademark, we're going to give money over to this organization and then they may end up lobbying, they may end up doing something good with it. [00:56:38] Speaker 02: Because that's no longer a government controlled speech operation and then it's compelled substitution. [00:56:44] Speaker 02: But to talk about the [00:56:48] Speaker 02: the the what you were talking about just adding um... the government's voice to public speech. [00:56:56] Speaker 02: I want to emphasize that that and I think it was talked about at the first panel what this buys them, what this buys producers is [00:57:09] Speaker 02: at least the effort to receive an effective marketing program by pooling their advertisements together. [00:57:15] Speaker 02: So I think it's more than just we're being deprived of the government, you know, having speech. [00:57:21] Speaker 02: We're being deprived of the government actively marketing our product on our behalf. [00:57:27] Speaker 02: And if they give it to a private group for them to decide what to do with our money, then we're back into it. [00:57:33] Speaker 04: Your basic economic logic here is if the government were spending [00:57:38] Speaker 04: a lot more money advocate and advertising for pork, that would tend to push the prices up. [00:57:47] Speaker 04: Pork prices up. [00:57:49] Speaker 04: That's your theory of bottom line injury. [00:57:52] Speaker 02: Well, I think my theory of bottom line injury is that and what the first panel said is that if the money isn't squandered or given to a private entity, [00:58:07] Speaker 02: it would be available and they would be required to use it reasonably to further engage in lawful and legitimate promotion activities. [00:58:17] Speaker 02: So my injury is more similar to the radio ad scenario where what producers are paying for and being promised is a very specific marketing and promotion service. [00:58:32] Speaker 04: Right, and what they're getting instead is a bunch on your [00:58:36] Speaker 04: merits allegations is a bunch of lobbying. [00:58:40] Speaker 04: So what is the basic economic logic that just lets us assume that the money spent for advertising would have been better for his bottom line than the money allegedly unlawfully spent for lobbying? [00:59:01] Speaker 04: I don't see that any of our cases support that proposition. [00:59:05] Speaker 02: I'm sorry, could you... I think I missed in the middle part. [00:59:10] Speaker 04: Your allegation is that they're spending all this money by design for lobbying. [00:59:17] Speaker 04: And what you want them to have done instead is spend all the same money for advertising. [00:59:23] Speaker 04: And the question for standing purposes is whether we can just assume as a matter of economic logic that the one is [00:59:34] Speaker 04: worse than the other for pig farmers bottom line. [00:59:37] Speaker 02: Well, I think our, let me just, let me clarify because I think our first premise is you're overpaying for a trademark that can't be justified for the money that's, that's paying. [00:59:48] Speaker 02: So essentially the, the, the primary argument before you get to the lobbying argument, the primary argument is you're, you're diminishing our advertising power that as a group you, you promised at least [01:00:01] Speaker 05: Does another human even apply, though, to the limited issue that's presented here, which is whether they can lawfully make the termination payment, which is different from the other ongoing payments? [01:00:13] Speaker 05: Is it different where the government, I mean, if we accept USDA's arguments, if they're contractually required to make the payment, does that make it different from the ongoing payments for the use of the trademark in terms of the harm? [01:00:28] Speaker 02: In terms of the harm, [01:00:33] Speaker 02: I lost the last part of the question. [01:00:37] Speaker 02: Does this issue go to the termination payment? [01:00:40] Speaker 05: Well, you're saying that your bottom line harm is that the funds are being misused for lobbying or other purposes, right? [01:00:45] Speaker 05: But if the funds are really just being used to satisfy a contractual obligation that the government is bound to pay, then isn't that a different type of claim from Mr. Dillenberg? [01:00:58] Speaker 02: I don't think you can separate the two because the question, especially with the checkoffs and government action, is it can't just be that whatever we've contracted for is therefore that we have to then abide by it because the government is still bound by furthering the purposes of the statute and the arbitrary and capricious standard. [01:01:22] Speaker 02: And so what they have to do is say that this contract is a reasonable effort to further the purposes of the statute. [01:01:32] Speaker 02: So the contract ties into the statutory purpose and the standing issue relates to the producers voted in this initial referendum to accept this, to accept [01:01:48] Speaker 02: the compelled payments in exchange for a very strict framework of how the government would run the advertising. [01:02:00] Speaker 02: So there's definitely broad discretion within that framework. [01:02:04] Speaker 02: But outside of that framework, they can't be compelled to either support speech. [01:02:08] Speaker 02: And inside of that framework, I think we're talking more about a business judgment type of rule. [01:02:14] Speaker 02: There's broad discretion, but if the secretary is squandering the money rather than giving them the advertisements that [01:02:22] Speaker 02: are designed to expand the marketplace for their product, that ends up being the injury. [01:02:29] Speaker 02: And to that, we can credit laws of economics. [01:02:35] Speaker 02: And I think that just before I sit down, that ties into [01:02:41] Speaker 02: the law to apply issue that was raised because I think in addition to the federal spending laws, you have throughout the guidelines and the PORC Act, you have checks on making sure the money won't be squandered. [01:02:58] Speaker 02: or that it won't be kind of given to a favored vendor. [01:03:01] Speaker 02: There's a clause we cited in our brief about that the guidelines expect that the board explain why a particular contact was chosen and if not lowest bid. [01:03:11] Speaker 02: All of these are designed to protect the investment of the producers into the fund that's designed to protect them. [01:03:20] Speaker 03: Thank you very much. [01:03:22] Speaker 02: Thank you. [01:03:26] Speaker 03: Let me see if we can fix your clock first. [01:03:29] Speaker 03: Ah, there we go. [01:04:06] Speaker 00: Your Honors, I'd like to make two brief points. [01:04:08] Speaker 00: On Judge Katz's questions and concerns about jurisdiction, I'd point the court to pages 663 to 68 of the appendix. [01:04:17] Speaker 00: That's the plaintiff's response to USDA's notice of its intent to authorize the termination of the payment. [01:04:24] Speaker 00: We deal with the arguments made there on the merits, but I think they demonstrate that the district court's interpretation in the minute order [01:04:32] Speaker 00: of its prior injunction is not so baseless, is not so frivolous that this court couldn't construe the minute order as at least a reasonable, if erroneous, interpretation of the injunction. [01:04:48] Speaker 00: I'd like to stress, however, and this is perhaps the more important point, that if the court determines that the [01:04:56] Speaker 00: minute order is not a reasonable interpretation of the injunction and the court determines that it must dismiss the government's appeal for lack of jurisdiction, it would be, I think, proper for the court to explain that the reason it was doing that is that the minute order, because it was an unreasonable interpretation, has no legal effect. [01:05:17] Speaker 00: That is, the minute order which prohibits the USDA from authorizing the termination has no legal effect because the prior injunction only prohibited future payments based on the 2016 agreement. [01:05:35] Speaker 04: sort of get you a decision on the merits baked into the jurisdictional system. [01:05:40] Speaker 00: But it would explain the court's jurisdictional ruling. [01:05:44] Speaker 00: And I think it would be fair, we wouldn't be sneaking in illicitly a merits argument. [01:05:50] Speaker 00: The one other point I'd like to briefly make, plaintiffs have a theory that each year the contract is renewed again. [01:05:58] Speaker 00: And so because the district court prohibited future payments, the contract vanishes and there is no termination obligation. [01:06:07] Speaker 00: That's just not a reasonable interpretation of the contract or what the district court did or what the district court thought it did. [01:06:14] Speaker 00: The USDA authorized the board to undertake a contract [01:06:19] Speaker 00: That contract has obligations that apply each year. [01:06:23] Speaker 00: USDA, to be sure, has to authorize payment. [01:06:27] Speaker 00: But if it didn't authorize payment, that would permit the board to invoke the termination provision. [01:06:32] Speaker 00: There's just no basis for saying that there's a renegotiation or renewal of the contract each year. [01:06:41] Speaker 00: Thank you, Your Honor. [01:06:58] Speaker 01: I'd also like to quickly make two points. [01:07:01] Speaker 01: First, as to the appealability of the amended order, obviously we felt like it was a modification of the injunction and therefore it was independently appealable. [01:07:10] Speaker 01: But even if it's deemed a nullity, we would agree with the government that this court should explain that. [01:07:18] Speaker 01: because there is an active – an actual case or controversy at this point about what the – what the meaning of the minute order is, and it has placed USDA in the position of having breached the – breached the contract. [01:07:31] Speaker 01: So an actual case or controversy has flown – sorry, has come from that. [01:07:39] Speaker 01: So it can't be the case that this minute order could escape judicial review in its entirety. [01:07:44] Speaker 01: The second point I would like to make is, as to standing, [01:07:51] Speaker 01: Council for plaintiffs is making this argument that producers are entitled to effective pork promotion, but there's no evidence that either the prior, the other white meat promotion or what it was replaced with, the pork be inspired promotion were ineffective. [01:08:08] Speaker 04: So there's the district court's merits ruling, which is that you vastly overpaid or you are now vastly overpaying for those trademarks. [01:08:19] Speaker 01: I don't think she ruled that the pork board was overpaying for the trademarks. [01:08:26] Speaker 01: The pork board has a current campaign which continues to use the pork and design logo. [01:08:32] Speaker 01: So the only way to have the current campaign would be to continue to have use of the marks. [01:08:37] Speaker 04: But the whole premise of the merits ruling was they bargained through the stipulation, they bargained for a new assessment whether it [01:08:46] Speaker 04: made economic sense to continue with these payments and the government made that assessment. [01:08:54] Speaker 04: It tried to value the trademarks and district court thought that the government's assessment was arbitrary. [01:09:05] Speaker 01: The district court disagreed with the way the government's expert went about evaluating the trademarks. [01:09:13] Speaker 04: So I don't think you can challenge the proposition that [01:09:17] Speaker 04: there was some kind of maladministration here. [01:09:24] Speaker 01: I think the question about the methodology used by the expert is a separate question from whether the pork producers are receiving pork promotions. [01:09:39] Speaker 01: It is not as if [01:09:42] Speaker 01: when the pork board stopped using the pork the other white meat as their primary campaign, that they continued to take a check off money and did nothing with it. [01:09:52] Speaker 01: They have this other campaign. [01:09:55] Speaker 01: So there was no separate evaluation of what the four individual marks were.