WASHINGTON (Nov. 7, 2003) — A federal appeals court's decision declaring the pork industry's “checkoff” program unconstitutional could affect the tire industry's efforts to create a similar program.
Supporters of a tire industry checkoff, however, feel it could still become a reality—as long as it avoids the pitfalls the pork industry's program fell into.
The National Pork Producers Council's “Pork—The Other White Meat” marketing campaign is funded by a checkoff, or assessment, of 45 cents per $100 of sales from pork producers. It has been one of the most visible commodity promotions in the U.S. Current law allows Congress to approve such industry programs, allowing involved businesses to promote their products through mutual effort without fear of antitrust sanctions from the Federal Trade Commission.
However, the Campaign for Family Farms, a Missouri-based coalition of small hog farmers, filed suit in federal court saying they were coerced to contribute to the marketing campaign and that this violated their First Amendment rights.
A federal district court ruled in favor of the Campaign for Family Farms, and on Oct. 22 the Sixth U.S. Circuit Court of Appeals in Cincinnati upheld the lower court.
For a number of months, the Tire Industry Association (TIA) has been in negotiations with the Rubber Manufacturers Association (RMA) to obtain an agreement to go ahead with a checkoff that would be funded by allocating 50 cents from every new tire sold for the program. Possible uses for the money include TV, radio and print advertising; educational programs in the schools on tire safety; and research, development and training programs.
The appeals court decision, however, could have a dampening effect on the tire industry's efforts, said Donald B. Shea, RMA president.
“One of the key things is that a checkoff program is constitutionally problematic unless there's an opt-out provision,” Mr. Shea said. “They're sending a pretty strong message that you can't have a mandatory checkoff program. Not that they said anything—as they oughtn't to—about a voluntary program.”
Roy E. Littlefield III, TIA executive vice president, was optimistic despite the court ruling. The decision, he said, “should re-emphasize the need to develop a checkoff program based more on education, research and training than publicity.… (It) gives us good guidelines for what to avoid. We want to make sure this doesn't happen to us.”
Incoming TIA President Larry Morgan, a staunch advocate of the checkoff, agreed with Mr. Littlefield. “We don't think this will affect our efforts at all,” Mr. Morgan said. “We realized some time ago that the alliance would have to spend a lot of its money, time and effort in consumer education and other things this group (the Pork Producers Council) hadn't done. We knew we couldn't just make it an ad campaign.”
Unlike the pork producers, Mr. Morgan added, tire industry support for a checkoff program is pretty much unanimous. “I can't envision anyone in our industry being opposed to it,” he said. “Everybody would be a beneficiary.”
Negotiations between TIA and the RMA on a checkoff program were scheduled to continue in Las Vegas the week of Nov. 4 during the International Tire Expo. TIA's goal is to send a draft to Congress in January, Mr. Littlefield said, but it is still unclear whether that will be possible.
The Pork Producers Council's checkoff program is the second to be declared unconstitutional in court. In July, another appellate court threw out the Cattlemen's Beef Promotion and Research Board's “Beef: It's What's For Dinner” marketing campaign.
The Justice Department is ex-pected to appeal that decision to the U.S. Supreme Court. It was unclear at Tire Business' presstime whether the Pork Producers Council would seek a Supreme Court appeal or a review by the entire panel of judges at the Sixth Circuit.