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Empire Kosher Poultry Inc. v. Hallowell

argued: February 17, 1987.



Author: Gibbons

Before GIBBONS, Chief Judge, SLOVITER, Circuit Judge, and SCIRICA, District Judge*fn*


GIBBONS, Chief Judge:

Empire Kosher Poultry, Inc. appeals from a summary judgment in favor of the defendants in its action seeking compensation for losses incurred as a result of a quarantine of poultry owned by Empire, imposed to prevent the spread of avian influenza. The defendants include officials of the Pennsylvania Department of Agriculture (PDA) (state defendants) and officials of the United States Department of Agriculture (USDA) (federal defendants).*fn1 Empire contends that the quarantine was a taking of its property for public use without compensation, that it was imposed in violation of due process, and that its imposition denied Empire equal protection of the law. The district court rejected these contentions. We will affirm. The federal defendants have moved to transfer this appeal to the Federal Circuit. We will deny that motion.


The Undisputed Facts

On April 22, 1983, a mild form of avian influenza was discovered in Lancaster County, Pennsylvania. Avian influenza is a viral infection that affects poultry but not humans. It is primarily transmitted through the movement of live, infected poultry. During the period involved in this action, there was no scientific procedure which could guarantee that a particular flock was not infected with the avian influenza. While a bird might have tested negatively, it might have either developed or been exposed to the disease before the test results were available. Thus and eradication program was necessary to protect the poultry industry, valued at ten billion dollars with exports of one-half billion dollars per year, and to protect the best low-cost source of protein for the public. At first the Commonwealth quarantined only the infected premises. Because the disease later became highly pathogenic, having the ability to cause extensive tissue destruction and death in poultry, in November, 1983 the PDA and the USDA established a quarantine zone covering several counties in Pennsylvania. Both departments also promulgated regulations that restricted the movement of poultry.

The USDA regulations restricted the movement of poultry from the quarantine zone to locations outside Pennsylvania, whereas the state regulations covered intrastate movements. Initially, the USDA regulations did not permit poultry located in the quarantine zone to be moved out of the state. On November 16, 1983, however, the USDA expanded the quarantine zone but provided that poultry under permit that had been inspected and found to be free of avian influenza could be moved within, or taken out of the quarantine zone for immediate slaughter. In November, 1983 the state regulations also allowed poultry to be moved from the quarantine area for slaughter. Permits were issued by the Avian Influenza Eradication Task Force that had been established by the USDA.

On December 8, 1983 the USDA revised its regulations to prohibit generally interstate movements of live poultry from the Pennsylvania quarantine area. The USDA itself, however, was permitted to move poultry for diagnostic or experimental purposes. Additionally, on December 23, 1983, the PDA similarly revised its regulations to prohibit the intrastate movement of live poultry from the quarantine area. These added restrictions were imposed because of the continued spread of the disease within the quarantine zone. For the same reason, on December 27, 1983, the quarantine zone was enlarged. Despite the quarantine, poultry that had been slaughtered and processed within the zone could be shipped anywhere without violating USDA regulations.

Empire processes kosher poultry products for worldwide distribution and sale. Kosher chickens must be raised, slaughtered and processed according to strict religious practices and procedures. Although it is more costly to produce kosher poultry, the required process yields more meat per bird. At the end of November, 1983 Empire operated three processing plants in the towns of Bird-in-Hand, Mifflintown, and Mount Union, Pennsylvania. Empire estimates that it had 340,000 chickens in the quarantine zone at the time the regulations were revised in December, 1983, all of which, Empire claims, were found at that time to be free of the disease. Those chickens were scheduled to be slaughtered in late February or early March, 1984. In late December 1983 or early January 1984, Empire was still placing poultry within the quarantine zone on farms operated by its contract growers. On January 17, 1984 Empire voluntarily closed its Bird-in-Hand plant, which was located within the quarantine zone. The Mifflintown and Mount Union plants were not within the quarantine zone.

In early February, 1984 Empire, then without a processing plant within the quarantine zone, requested permission of the PDA to move live poultry out of that zone to its plant in Mifflintown for immediate slaughter. On February 6, 1984, Dr. Max A. Van Buskirk, Director of the Bureau of Animal Industry in the PDA preliminarily recommended to Penrose Hallowell, the Pennsylvania Secretary of Agriculture, that, upon permit, live uninfected poultry be allowed to be taken out of the quarantine zone for immediate slaughter. In early February, Dr. Van Buskirk discussed this recommendation with Dr. Euclid Sharman of the USDA, who told him that he did not concur but that he would discuss the matter with his staff. Dr. Sharman subsequently discussed Van Buskirk's proposal with Dr. John K. Atwell, Deputy Administrator of the Animal and Plant Health Inspection Service*fn2 and with two staff members, Dr. William Buisch and Dr. Allen Furr. All agreed that Van Buskirk's proposal was inappropriate because there was no way to insure that the poultry was disease-free and because the outbreak of the disease had not then been brought under control.*fn3 Furthermore, if the state had adopted Van Buskirks' recommendation, Sharman would have recommended that the federal quarantine area be expanded to encompass the entire state of Pennsylvania. At that time, the USDA quarantine extended only to all or parts of nine counties. In any case, the final decision of the PDA was to deny Empire permission to move its live poultry out of the quarantine zone for slaughter.

On February 9, 1984 Empire brought an action against the Commonwealth of Pennsylvania in the United States District Court for the Middle District of Pennsylvania, seeking a preliminary injunction to permit it to move its live poultry outside the quarantine area. See Empire Kosher Poultry, Inc. v. Pennsylvania, Civ. No. 84-0196. After a hearing on February 14, 1984, the district court denied the motion on February 15, 1984. On March 21, 1984, Empire voluntarily dismissed, without prejudice, the February 9, 1984 action.

Meanwhile, on February 22, 1984, a flock of 79,000 birds owned by Empire, which was being raised by a farmer within the quarantine zone at Rehresburg, Pennsylvania, was found to have avian influenza. More than 74,000 of these birds were therefore destroyed on February 24, 1984. Empire, pursuant to 9 C.F.R. ยง 81.15 (1984), sought and received compensation from the federal government for its loss from the destruction of this poultry in the amount of $121,959.58 in March or April 1984.*fn4 On April 9, 1984 Empire also submitted a claim to the USDA for compensation for its losses incurred because it was unable to move its chickens outside the quarantine zone to be slaughtered. Empire claimed that the restriction on movement forced it to sell its birds at a substantial loss (below its cost) to other processors who had plants within the zone, and to buy substitute chickens for its kosher outlets outside the zone. The USDA denied this claim on April 17, 1984 because it did not fall within the reimbursement regulations -- i.e., the claim did not involved a loss of chickens destroyed due to infection or exposure to avian influenza.


Proceedings in the District Court

On October 24, 1984 Empire filed the instant action. It seeks $66,507.27 plus interest and cost of suit. Empire asserts that the federal and state officials, by enforcing the quarantine restrictions that prevented it from removing its live chickens for processing outside the zone, caused a "taking" of its property without just compensation, and deprived it of its property without due process of law, by arbitrarily and capriciously imposing an unnecessary quarantine. Empire also claims that the USDA reimbursement provisions which compensated owners of poultry that was destroyed pursuant to the quarantine regulations denied equal protection of the law to poultry owners such as Empire who were injured in different ways because of the quarantine.

Both the federal and state defendants filed motions for summary judgment. On February 25, 1986, a United states Magistrate filed a report that recommended granting summary judgment for both sets of defendants. Empire filed exceptions and thereafter, on May 23, 1986, the district court issued a ...

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