The 4th District Court of Appeals sided with the state Department of Agriculture, Trade and Consumer Protection in the consolidated cases brought by dairy farms in Walworth and Calumet counties.
The raw milk producers sued separately, seeking a court order that their operations were legal. The cases were combined and in 2011 a Dane County judge rejected their requests for an immediate ruling in their favor. The appeals court upheld that decision Thursday, ending the case unless the farmers ask the state Supreme Court to review it.
Attorney Elizabeth Rich, who represented farmers in both cases, said she had not spoken with them to discuss whether they would take the case to the Supreme Court.
One case was brought by Mark and Petra Zinniker of Walworth County. They lost their dairy license in 2009 after 35 people got sick after allegedly drinking raw milk from the farm.
In early 2010, a limited liability coalition formed by raw milk supporters called Nourished by Nature entered into a contract with the Zinniker farm to purchase a herd of dairy cows. Nourished by Nature agreed to pay a fee to the Zinnikers and members would then visit the farm and collect raw milk for their own consumption at home.
The Zinnikers' attorney asked the state whether that arrangement was legal, and DATCP responded with a letter saying it was a "sham arrangement" that could result in civil and criminal penalties. The Zinnikers then filed a lawsuit, seeking a court ruling that their operation was indeed legal.
State regulators argued, and the appeals court agreed, that the Zinnikers were breaking the law because they were distributing milk produced on their farm without a milk producer's license.
Because of that conclusion, it's not necessary to determine whether a person has a right to consumer raw milk, the court said.
"Even assuming that the members of Nourished by Nature have a right to consume unpasteurized milk, the Zinnikers do not have a legal right to operate a dairy farm as milk producers without a license," the court said.
But Rich, their attorney, said the state was deliberately avoiding the real issue of whether people who want to drink raw milk can do so through private buying clubs.
The ruling comes after a Sauk County jury last year, in a similar case, found dairy farmer Vernon Hershberger not guilty of charges he produced and sold raw milk without the required licenses.
"Right now we have a confusing state of law in Wisconsin," Rich said. "What I'm seeing is a very clear rift between what the people want and what the judicial and executive branches want."
A spokesman for DATCP said only that the agency was pleased with the ruling.
In the other case, the appeals court said the operators of GrassWay Organics Farm Store in New Holstein needed a retail license to sell milk to members of an association who pay a fee to buy from the store. The store has a milk producer license issued by DATCP, but in 2007 the agency told its operators they couldn't sell or distribute raw milk.
Store owners Wayne and Kay Craig sued, seeking a court ruling that selling raw milk to members of the association was legal.
The appeals court agreed with the circuit court, which determined the Craigs needed a retail food establishment license. The ruling does not address whether the sale of raw milk would be legal if a retail license were obtained.