Jim Jones v. John Gale

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________

No. 06-1308
___________

Jim Jones; Terrence M. Schumacher; *
Shad Dahlgren; Harold G. Rickertsen; *
Todd Ehler; Robert E. Beck, III, *
*
Appellees, *
*
v. *
* Appeal from the United States
John Gale, in his official capacity * District Court for the
as Secretary of State of Nebraska; * District of Nebraska.
Jon Bruning, in his official capacity *
as Attorney General of Nebraska, *
*
Appellants. *
*
Organization for Competitive Markets; *
R-Calf USA; Oregon Livestock *
Producers Association; Spokane County *
Cattle Producers; Icon; The Independent *
Beef Association of North Dakota; *
Montana Cattleman's Association; *
Nevada Livestock Association; State *
of Minnesota; State of Iowa; State of *
Missouri; State of North Dakota; State *
of West Virginia; Nebraska Farmers *
Union; The Center for Rural Affairs; *
The Nebraska Grange; Women *
Involved in Farm Economics; *
The Nebraska Catholic Conference; *
The American Corn Growers of *
Nebraska; Nebraska Appleseed Center *
for Law in the Public Interest; *
Sierra Club; The Great Plains *
Environmental Law Center; Nebraska *
Environmental Action Coalition; *
Michael Jacobson; Nebraska League *
of Rural Voters; Nebraskans for Peace; *
National Farmers Union; National *
Family Farm Coalition; American Corn *
Growers; Minnesota Farmers Union; *
Land Stewardship Project; North *
Dakota Farmers Union; Dakota *
Resource Council; South Dakota *
Farmers Union; Dakota Rural Action; *
Iowa Farmers Union; Iowa Citizens *
for Community Improvement; Missouri *
Farmers Union; Missouri Rural Crisis *
Center; AR Farmers Union; Campaign *
For Family Farms; Western *
Organization of Resource Councils; *
Federation of Southern Cooperatives; *
Illinois Farmers Union; Illinois *
Stewardship Alliance; IN Farmers *
Union; Citizens Action Coalition *
of Indiana; Powder River Basin *
Resource Council; KS Farmers Union; *
WI Farmers Union; OH Farmers Union; *
MI Farmers Union; Pennsylvania *
Farmers Union; Rocky Mountain *
Farmers Union; Montana Farmers *
Union; Utah Farmers Union; Texas *
Farmers Union; Alaska Farmers Union; *
Oregon Farmers Union; WA Farmers *
Union; California Farmers Union, *
*
Amici on behalf *
of Appellants. *
*

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Nebraska Bankers Association; *
Nebraska Chamber of Commerce and *
Industry, Inc.; The Nebraska Realtors *
Association; South Dakota Farm *
Bureau, *
*
Amici on Behalf of Appellees. *
*
United States of America, *
*
Amicus on Behalf of Appellees. *
___________

Submitted: September 28, 2006
Filed: December 13, 2006
___________

Before ARNOLD, BYE, and MELLOY, Circuit Judges.
___________

ARNOLD, Circuit Judge.

The plaintiffs, six people who own various interests in Nebraska farm and ranch
land operations, filed this action against Nebraska's secretary of state and attorney
general in their official capacities (State Officials). The plaintiffs claimed that
Initiative 300, which voters adopted as part of the state constitution in 1982, see Neb.
Const. art. XII, § 8, violates the commerce clause, privileges and immunities clause,
and equal protection clause of the United States Constitution and the Americans with
Disabilities Act (ADA). All parties moved for summary judgment. The district court1
granted summary judgment to the plaintiffs on their commerce clause and ADA
claims, and granted summary judgment to the State Officials on the remaining claims.
The State Officials appeal, and we affirm the district court's judgment that the

1
The Honorable Laurie Smith Camp, United States District Judge for the
District of Nebraska.

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amendment based on Initiative 300 is unconstitutional because it violates the dormant
commerce clause.

I.
Initiative 300 prohibits corporations or syndicates (non-family-owned limited
partnerships) from acquiring an interest in "real estate used for farming or ranching
in [Nebraska]" or "engag[ing] in farming or ranching," with certain exceptions. See
Neb. Const. art. XII, § 8. The initiative originated as a constitutional amendment
proposed through the initiative process and appeared as a ballot question on
Nebraska's 1982 general election ballot. The Nebraska Attorney General prepared a
ballot title and explanatory statement for Initiative 300. See Neb. Stat. § 32-1410(1).
The title read: "Shall a constitutional prohibition be created prohibiting ownership of
Nebraska farm or ranch land by any corporation, domestic or foreign, which is not a
Nebraska family farm corporation ... ?" An explanatory statement defines the effect
of a vote for and against a measure. Id. The explanatory statement presented to
Nebraska voters for Initiative 300 read: "A vote FOR will create a constitutional
prohibition against further purchase of Nebraska farm and ranch lands by any
corporation or syndicate other than a Nebraska family farm corporation. A vote
AGAINST will reject such a constitutional restriction on ownership of Nebraska farm
and ranch land." The voters adopted Initiative 300, and it became part of the Nebraska
constitution upon the issuance of a proclamation by the governor in 1982.

The Initiative defines a "family farm or ranch corporation," which is
specifically excepted from the initiative's restrictions, as "a corporation engaged in
farming or ranching or the ownership of agricultural land, in which the majority of the
voting stock is held by members of a family ... at least one of whom is a person
residing on or actively engaged in the day to day labor and management of the farm
or ranch." Neb. Const. art. XII, § 8. In addition, an exemption from the corporate
farming ban is provided, inter alia, to former "family farm corporations" for a period

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of fifty years after they cease to meet the criteria for that designation, provided that
majority ownership of the corporation remains within the family. Id.

II.
The State Officials contend that none of the plaintiffs had standing to bring the
commerce clause claim and therefore the district court erred in concluding that it had
jurisdiction. A plaintiff has the burden of establishing subject matter jurisdiction,
Hoekel v. Plumbing Planning Corp., 20 F.3d 839, 840 (8th Cir. 1994) (per curiam),
cert. denied, 513 U.S. 974 (1994), for which standing is a prerequisite, Faibisch v.
University of Minn., 304 F.3d 797, 801 (8th Cir. 2002). To establish standing, a
plaintiff is required to show that he or she had " 'suffered an injury in fact, meaning
that the injury is (a) concrete and particularized and (b) actual or imminent, not
conjectural or hypothetical.' Second, the injury must be traceable to the defendant's
challenged action. Third, it must be 'likely' rather than 'speculative' that a favorable
decision will redress the injury." South Dakota Farm Bureau, Inc. v. Hazeltine,
340 F.3d 583, 591 (8th Cir. 2003) (quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 560-61 (1992)), cert. denied, 541 U.S. 1037 (2004).

We review the district court's conclusion that the plaintiffs had standing de
novo. St. Paul Area Chamber of Commerce v. Gaertner, 439 F.3d 481, 484 (8th Cir.
2006). Although the district court concluded that all of the plaintiffs had standing to
bring the commerce clause claim, we have said previously that "where one plaintiff
establishes standing to sue, the standing of other plaintiffs is immaterial" to
jurisdiction. National Wildlife Fed'n v. Agricultural Stabilization & Conservation
Serv., 955 F.2d 1199, 1203 (8th Cir. 1992) (internal quotation marks omitted) (citing
Bowen v. Kendrick, 487 U.S. 589, 620 n.15 (1988)).

Plaintiff Terrence Schumacher, a resident of Boulder, Colorado, has an
ownership interest in Nebraska farmland in five counties. Neither he nor any of his
relatives reside on his farmland and he does not live close enough to the land to

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perform the day-to-day labor and manage it. Mr. Schumacher would like to transfer
his farmland to a limited liability entity, which would, inter alia, allow for improved
fiscal planning and operational management of the farmland as an operating unit and
provide more favorable options for estate planning. Initiative 300 precludes
Mr. Schumacher from creating a limited liability farm operation because he does not
meet the conditions of the family farm exemption, and as a result he has suffered and
continues to suffer economic loss based on reduced fiscal and operational
management efficiencies, marketing opportunities, and borrowing power, as well as
increased administration expenses and federal estate taxes. Because Mr. Schumacher
cannot qualify for the family farm exemption, he is exposed to personal liability for
the debts, obligations, contracts, and torts related to his Nebraska farmland.

The State Officials acknowledge that Mr. Schumacher may not purchase
farmland on a limited liability basis unless he or a member of his family resides on the
farmland or is engaged in the farm's day-to-day labor and management. But they
argue that he nevertheless lacks standing because the family-farm requirements apply
to everyone and thus do not unduly burden Mr. Schumacher's interests. We think,
however, that the question of interstate commerce 'burdens' pertains to the merits of
Mr. Schumacher's claim and is "analytically distinct from the 'injury-in-fact'
determination that is central to standing." Adams v. Watson, 10 F.3d 915, 925 n.16
(1st Cir. 1993).

Robert Beck III, another plaintiff, resides in rural Kearney, Nebraska, where he
owns a cattle feedlot that provides for the daily care and feeding of cattle owned by
his customers, many of whom live outside of Nebraska. Mr. Beck cannot contract
with non-exempt out-of-state corporate entities for the purpose of raising and feeding
livestock for slaughter. Mr. Beck alleges that as a result, he has lost business, income,
and borrowing power. He further alleges that Initiative 300 has prevented him from
gaining unfettered access to the national cattle market, and thereby reduced his
competitiveness and ability to gain new customers resulting in economic loss.

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In addition, Mr. Beck's access to working capital from out-of-state corporations is
restricted because Initiative 300 prohibits non-exempt entities that provide equity in
the form of ownership of cattle from feeding cattle at Mr. Beck's feedlot. The
initiative prohibits him from freely changing ownership of his commercial cattle
feeding operations and limits his ability to pool assets and resources with other
unrelated Nebraska farmers and out-of-state corporations to acquire more land and
personal assets for future development of his cattle operation. Finally, Initiative 300
prevents Mr. Beck from establishing succession plans that would allow him to transfer
ownership gradually to employees who provide the day-to-day labor while he
continues to manage the operation.

The State Officials acknowledge that under Hazeltine, 340 F.3d at 392, a
plaintiff who does substantial business with out-of-state corporations and would suffer
imminent business losses as a result of the challenged law has standing to bring a
commerce clause claim. They argue, however, that Mr. Beck lacks standing because
he does not have "actual contracts with out-of-state corporations" and therefore did
not suffer an injury in fact.

But we agree with the district court that the predicaments of
Messrs. Schumacher and Beck are comparable to those of the plaintiffs in Hazeltine,
who we concluded had standing to challenge an amendment to the South Dakota
Constitution that prohibited corporations and syndicates from holding land in the state.
See Hazeltine, 340 F.3d at 591-92. We also think that the plaintiffs have standing to
challenge the constitutionality of a law that has a direct negative effect on their
" 'borrowing power, financial strength, and fiscal planning,' " see Hazeltine, 340 F.3d
at 592 (quoting Clinton v. City of New York, 524 U.S. 417, 431 (1998). We do not
believe that Mr. Beck was required to show that he had contracted with an out-of-state
corporation in order to have standing. Both Mr. Schumacher and Mr. Beck explained
how Initiative 300 had negatively affected their ability to earn income, borrow, and
plan for their financial future. Mr. Schumacher's asserted inability to dispose of his

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land as he wishes weakens his financial position in precisely the way that meets the
conditions we set out in Hazeltine and that the Supreme Court established in Lujan:
His claim involves a concrete and actual injury that can be traced back to the State
Officials, and it is entirely likely that a favorable ruling will redress the injury.
Because Messrs. Schumacher and Beck have standing, the district court had
jurisdiction over the case.

III.
We turn now to the question of whether Initiative 300 violates the dormant
commerce clause of the United States Constitution. Where the relevant facts are not
in dispute, we review de novo the question of whether a state constitutional provision
violates the commerce clause. See R & M Oil & Supply, Inc. v. Saunders, 307 F.3d
731, 734 (8th Cir. 2002).

The dormant commerce clause prohibits states from enacting laws that
"discriminate against or unduly burden interstate commerce." Hazeltine, 340 F.3d at
592-93. As we explained in Hazeltine, when determining whether a law violates the
dormant commerce clause, we ask first "whether the challenged law discriminates
against interstate commerce. Discrimination in this context refers to 'differential
treatment of in-state and out-of-state economic interests that benefits the former and
burdens the latter.' " Id. at 593. (quoting Oregon Waste Sys., Inc. v. Department of
Envtl. Quality, 511 U.S. 93, 99 (1994)). A law "overtly discriminates" against
interstate commerce if it is discriminatory on its face, if it has a discriminatory
purpose, or if it has a discriminatory effect. U & I Sanitation v. City of Columbus, 205
F.3d 1063, 1067 (8th Cir. 2000).

A.
We consider first whether Initiative 300 is discriminatory on its face. The State
Officials argue that because Initiative 300 does not expressly prohibit the owning of
agricultural land by out-of-state citizens and does not exclude solely out-of-state

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corporations, it cannot be interpreted to discriminate facially against interstate
commerce. We do not think that an interstate-commerce claim is precluded by the
absence of an express prohibition on non-resident ownership or the fact that some
Nebraska corporations (those that are not "family farm corporations") may suffer a
negative impact under Initiative 300, see C & A Carbone, Inc. v. Town of Clarkstown,
511 U.S. 383, 391-92 (1994). We conclude instead that Initiative 300 is facially
discriminatory because its prohibition against farming by corporations and syndicates
does not apply to family farm corporations or limited partnerships in which at least
one family member resides on or engages in the daily labor and management of the
farm. We agree with the district court's holding that "Initiative 300 on its face,
therefore, favors Nebraska residents, and people who are in such close proximity to
Nebraska farms and ranches that a daily commute is physically and economically
feasible for them." Jones, 405 F. Supp. 2d at 1081.

The State Officials maintain that this is an incorrect interpretation of Initiative
300. They argue that the law does not require the majority shareholder to live or work
on farmland in Nebraska to qualify for the exception; they assert that a Colorado
family farm corporation, for example, could operate on land in Nebraska as long as
its majority shareholder or one of his or her family members lived or worked at the
location of the corporation's Colorado farm. This argument is meritless. Although,
as the officials observe, "[i]f a law is susceptible of a reasonable interpretation which
supports its constitutionality, the court must accord the law that meaning," Planned
Parenthood of Minnesota v. State of Minnesota, 910 F.2d 479, 482 (8th Cir. 1990),
we do not believe that the interpretation offered by the State Officials is reasonable.
Instead, their proposed interpretation of the family farm exemption, which attempts
to avoid the interstate commerce problem, is untenable because it conflicts with the
plain language of Initiative 300, contradicts the ballot language presented to voters,
and is inconsistent with the Nebraska Supreme Court's reading of the law.

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 We give the words of Initiative 300 their most natural and obvious meaning.
See Pig Pro Nonstock Coop. v. Moore, 253 Neb. 72, 83, 568 N.W.2d 217, 224 (1997);
see also Planned Parenthood of Mid-Missouri & Eastern Kansas, Inc. v. Dempsey,
167 F.3d 458, 461 (8th Cir. 1999). As plaintiffs point out, the initiative regulates the
ownership of land "in this state" and requires residing on or engaging in the daily
labor and management "of the farm or ranch." Neb. Const. art. XII, § 8 (emphases
added). The focus of the text is thus on activities within the state of Nebraska, and the
phrase "of the farm or ranch" can only refer to a farm or ranch in Nebraska. Despite
the State Officials' heroic effort to develop a plausible alternative construction, we
think it rather plain that Initiative 300 requires residing or working on a Nebraska
farm.

Our reading acquires further support from the ballot language that accompanied
the text when Initiative 300 was voted on. As we have already said, the ballot stated
that the amendment's purpose was to prohibit further purchases of agricultural land
"by any corporation ... other than ... a Nebraska family farm corporation." Jones,
405 F. Supp. 2d at 1073 (emphasis added). The words "a Nebraska family farm
corporation" cannot reasonably be read to mean that family farm corporations in other
states could qualify.

The Nebraska Supreme Court's interpretation of Initiative 300 also undermines
the State Officials' proposed construction. The court stated that "the plain language
of Article XII § 8" prohibits "absentee ownership and operation of farm and ranch
land by a corporate entity." Pig Pro., 253 Neb. at 91, 568 N.W.2d at 228. If the
initiative meant to prohibit absentee ownership, it would manifestly defeat its purpose
to interpret it to mean that a corporation located in some other state would be allowed
to operate farmland in Nebraska.

The State Officials quote Dempsey for the proposition that when "an otherwise
acceptable construction of a statute would raise serious constitutional problems, the

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Court will construe the statute to avoid such problems." See Dempsey, 167 F.3d at
461 (internal quotations and citations omitted). But the officials are engaging in
selective quotation. In Dempsey, we specifically held that we always begin statutory
interpretation with the "plain language of the statute itself" and that we will construe
a statute to avoid constitutional problems only if its "language is ambiguous" and such
a construction does not plainly contradict the "legislative intent." Id. As we have
said, the language of Initiative 300 plainly requires residing or working on a Nebraska
farm; thus there is no ambiguity to construe. We note, moreover, that even if there
were an ambiguity, we would reject the State Officials' proposed interpretation
because it would frustrate the voters' intent, which we address more fully below.

Thus, we read Initiative 300 as the district court did and hold that Initiative 300
is discriminatory on its face because it affords "differential treatment of in-state and
out-of-state economic interests that benefits the former and burdens the latter."
Hazeltine, 340 F.3d at 593 (internal citations omitted).

B.
Although we have already determined based on a facial review that Initiative
300 is discriminatory, we agree with the district court that there is another,
independent reason for concluding that it burdens out-of-state interests: The initiative
has a discriminatory intent. Cf. Hazeltine, 340 F.3d at 593. As the State Officials
point out, the Nebraska Supreme Court has held that the intent of the voters in
adopting an initiative amendment to the state constitution must be determined from
the words of the amendment itself. See Pig Pro, 253 Neb. at 82, N.W.2d at 223-24.
But the State Officials admit that we are not bound by the Nebraska Supreme Court's
precedent on this point. Rather, as we have held previously, we "look to direct and
indirect evidence to determine whether a state adopted a statute with a discriminatory
purpose," which may include evidence in the form of "statements by lawmakers."
Smithfield Foods, Inc. v. Miller, 367 F.3d 1061, 1065 (8th Cir. 2004). In determining
the purpose of an initiative amendment in Hazeltine, 340 F.3d at 593-96, we relied on

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the statements and conduct of the amendment's drafters. And in SDDS, Inc. v. South
Dakota, 47 F.3d 263, 268 (8th Cir. 1995), we considered a pamphlet prepared for
voters by the state attorney general in determining whether a referendum had a
discriminatory intent.

The text of Initiative 300 and the ballot title reveal its discriminatory purpose.
Under Nebraska law, a "ballot title shall express the purpose of the measure"
submitted to the voters, Neb. Stat. § 32-1410(1), and here the ballot title told voters
that Initiative 300 would "prohibit[] ownership of Nebraska farm or ranch land by any
corporation, domestic or foreign, which is not a Nebraska family farm corporation."
We agree with the district court that the "ballot title, and the language of Initiative 300
defining limited-liability-entity exemptions for family farms and ranches, clearly
indicate that people living and working in Nebraska, and their families, will be given
... favored treatment." Jones, 405 F. Supp. 2d at 1080. The manifest purpose of
Initiative 300 therefore was to differentiate, or discriminate, between family farm
corporations located in Nebraska as opposed to those located elsewhere.

Further, while we deem it unnecessary to discuss in detail the history preceding
the adoption of Initiative 300, we believe that that history bolsters the plaintiffs'
contention that discriminatory intent motivated voters to adopt Initiative 300. To
name but one example, television advertisements that supporters of Initiative 300
produced before its adoption concluded by stating: "Let's send a message to those rich
out-of-state corporations. Our land's not for sale, and neither is our vote. Vote for
Initiative 300." It is clear beyond cavil that these ads bristle with an animus against
out-of-state corporations.

C.
We have concluded that Initiative 300 discriminates against out-of-state entities
both on its face and because of its discriminatory intent. And if a state constitutional
provision "is indeed discriminatory, it is 'per se invalid' unless the [State] 'can

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demonstrate, under rigorous scrutiny, that [it has] no other means to advance a
legitimate local interest.' " Hazeltine, 340 F.3d at 593 (quoting C & A Carbone, Inc.
v. Town of Clarkstown, 511 U.S. 383, 392 (1994)).

The State Officials argue that some of the threats that stem from unrestricted
corporate ownership of Nebraska farm and ranch land include absentee owners of
land, negative effects on the social and economic culture of rural Nebraska, and a lack
of good stewardship of the state's land, water, and natural resources. While the State
Officials concede the district court's finding that the third problem could be resolved
through other means, as, for instance, by regulation, they assert that the first two
issues require the intervention of Initiative 300.

As the plaintiffs point out, however, the State Officials' argument with respect
to preventing absentee ownership of land is directly contradicted by their
interpretation of the family farm exception, under which an out-of-state corporation
could own farmland or engage in farming operations without residing or performing
daily labor in Nebraska. In addition, the State Officials do not indicate why land use
and environmental regulations could not resolve any difficulties associated with
absentee ownership. We think that the same holds true for the State Officials' claim
about the "negative effects on the social and economic culture of rural Nebraska,"
though we cannot be sure what is meant by these terms. It appears in fact that the
State Officials are attempting to obfuscate the issue by using such a vague definition
of these "negative effects" that the definition itself is what prevents us from suggesting
concrete alternative measures. Were the state interests more clearly defined, we
would be able to discern whether specific regulations could address the particular
difficulties that frustrate the promotion of those interests. We assume that a mere
desire to maintain the status quo cannot in itself be a "legitimate local interest."
Indeed, it is that kind of xenophobia that the dormant commerce clause sets its face
against.

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 The State Officials failed to meet their burden of showing that Nebraska could
not advance a legitimate local interest without discriminating against non-resident
farm corporations and limited partnerships. The amendment passed as a result of
Initiative 300 thus fails the conditions that we set out in Hazeltine, and we affirm the
district court's holding that Neb. Const. art. XII, § 8 violates the dormant commerce
clause both on its face and based on its discriminatory intent.

IV.
The State Officials urge us not to hold the entire amendment unconstitutional
even if part of it is unconstitutional in its current form; rather, they say, we should
sever its unconstitutional portions. As the district court explained, the Nebraska
Supreme Court has held that a portion of a statute is severable if a "workable plan"
remains after severance, the valid portions are "independently enforceable," the
invalid portion did not serve as "such an inducement to the valid parts that the valid
parts would not have passed without the invalid part," and severance will not violate
the "intent of the Legislature." Jaksha v. State, 241 Neb. 106, 129, 486 N.W.2d 858,
873 (1992), as quoted in Jones, 405 F. Supp. 2d at 1087. We note, as did the district
court, that the Nebraska Supreme Court has held that the constitutional part of an
initiative to amend the state constitution "may be saved only if it appears that the
unconstitutional part did not constitute an inducement to the passage of the remaining
[part]." Duggan v. Beerman, 249 Neb. 411, 430, 544 N.W.2d 68, 79-80 (1996).

While severing the unconstitutional portion of the initiative amendment here
leaves a workable plan that is independently enforceable, a severance would not
satisfy the conditions that the Nebraska Supreme Court has outlined for a severance.
Initiative 300 contains no severability clause and, like the district court, we "cannot
conclude that the residency or day-to-day labor-and-management provisions in the
family-farm exemption were not an inducement to the passage of Initiative 300,"
Jones, 405 F. Supp. 2d at 1088. Reading the amendment as we do, it would clearly
violate the voters' intent to sever the portion in dispute. We thus have no other option

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than to affirm the district court's judgment and hold that the entire amendment based
on Initiative 300 is unconstitutional.

V.
The State Officials also argue that six witness declarations, three depositions,
certain deposition exhibits, and two videotape exhibits, all of which the plaintiffs
offered in support of their motion for summary judgment, contained information that
was not relevant to the adjudication of this case. We have considered the State
Officials' objections and conclude that they are meritless.

VI.
Because we agree with the district court's decision on the grounds that Neb.
Const. art. XII, § 8 violates the dormant commerce clause, we have no occasion to
reach the question of whether it also violates the ADA. We note that it may become
necessary to address that question if the plaintiffs pressing the ADA claim move for
and receive attorneys' fees in the district court. Until that happens, however, we see
no reason to rule on the question of the applicability and effect of the ADA in the
current circumstances of the case.

Affirmed.
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