Oct. 5, 2018 – An artisanal butter company based in Ohio recently lost a three-pronged constitutional challenge to Wisconsin’s butter-grading requirement, concluding the grading system requirements are rationally related to legitimate state interests.

Minerva Dairy Inc., a family-owned dairy company, produces Amish-style butter using milk from pasture-raised cows. The small batches are slow-churned.

Minerva was selling its artisanal butter at a retail store in Lake Geneva, but the company stopped selling in Wisconsin after receiving a warning letter from the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP).

The warning letter informed Minerva that it could not sell “ungraded” butter in Wisconsin, butter not graded under the state’s butter-grading requirement.

In Wisconsin, butter sold at retail must be graded by a Wisconsin-licensed butter grader or the U.S. Department of Agriculture. This requirement applies to in-state and out-of-state butter manufacturers. Licensed graders grade butter based on numerous characteristics relating to body, flavor, color, and salt – 18 characteristics in total.

The statute does not prohibit an out-of-state individual from becoming a Wisconsin-licensed butter grader. That is, those with a Wisconsin license can grade butter produced at out-of-state facilities for purposes of retail sale in Wisconsin.

However, Minerva sued DATCP officials under 42 U.S.C. section 1983, alleging the state’s butter-grading statute violates three clauses of the U.S. Constitution: the Due Process Clause, the Equal Protection Clause, and the dormant Commerce Clause.

The U.S. District Court for the Western District of Wisconsin granted a summary judgment in favor of DATCP. Recently, in Minerva Dairy Inc. v. Harsdorf, No. 18-1520 (Oct. 3, 2018), a three-judge panel for the Seventh Circuit Court of Appeals affirmed.

Due Process Clause

The panel noted that economic regulations can violate the substantive due process rights of businesses, if they have no rational basis. But Wisconsin’s butter-grading requirement does have a rational basis, the panel noted in its analysis.

First, Wisconsin has an interest in providing information to consumers about the quality of butter sold in the state. “Of course, not all consumers will care about a butter’s grade, just as not all consumers will care about whether a food item is genetically modified or organic,” wrote Seventh Circuit Appeals Court Judge Joel Flaum.

“But it is reasonable to think that some consumers care about the quality of butter they purchase – for example, experienced bakers – and the state has a legitimate interest in ensuring that those consumers receive that information.”

The panel also said the state has a legitimate interest in protecting the integrity and reputation of butter produced in Wisconsin, which promotes commerce.

Minerva argued that Wisconsin’s butter-grading requirement is not rationally related to those interests because consumers don’t understand the grading system and the grading is “subjective,” based in the individual grader’s taste preferences.

The panel rejected those arguments, noting that under rational basis review, a law passes constitutional muster if there is some conceivable reason it passed, and the state does not need to provide evidence or empirical data to support the policy.

Flaum noted the butter-grading statute would still survive rationale basis review “even if the state were required to present actual evidence to support its rationale.”

Equal Protection Clause

The panel rejected Minerva’s claim that the butter-grading requirement treats graded and ungraded butter differently, with no rational basis, and discriminates between butter and other similar products, such as cheese, which can be sold without grading.

The panel noted that Wisconsin does have legitimate interests in regulating ungraded butter, as noted in the due process analysis, and “the butter grading statute does not violate the Equal Protection Clause simply because Wisconsin failed to implement mandatory grading schemes for other commodities,” Judge Flaum noted.

Dormant Commerce Clause

Finally, the panel rejected Minerva’s claim that Wisconsin’s butter-grading law violates the dormant Commerce Clause by discriminating against out-of-state butter producers such as Minerva, which are disadvantaged regarding licensing and grade labeling.

“The labeling requirement applies to all producers, whether they reside in-state or out-of-state,” Judge Flaum wrote. “The statute is neutral with respect to licensing, too.”

“On its face, the statute allows any individual to apply for a butter-grading license, regardless of whether they reside in-state or out-of-state.”

The panel noted that any in-state butter maker must comply with same grading requirements as an out-of-state butter makers like Minerva, and the law does not prohibit Wisconsin licensed graders from grading butter at out-of-state facilities.

Minerva argued that discrimination is evident because any out-of-state individual who wishes to be a Wisconsin-licensed butter grader must travel to Wisconsin for an exam. But the panel noted that geographical fact does not constitute interstate discrimination.