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Victory for Gerawan Farms in fight against UFW contract

In a May 5, 2015, photo, farmworkers and supporters march in advance of a vote by the Washington, D.C., City Council on a measure "calling on Gerawan Farming to honor a contract issued in 2013 by a neutral mediator and approved by the state."
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In a May 5, 2015, photo, farmworkers and supporters march in advance of a vote by the Washington, D.C., City Council on a measure "calling on Gerawan Farming to honor a contract issued in 2013 by a neutral mediator and approved by the state."

In a victory for America's biggest peach farm, a California appeals court has ruled that the state cannot force a union contract on a farmer after the sides fail to come to terms in mediation.

Gerawan Farms, a huge operation of more than 12,000 acres in California's Central Valley, has been locked in a standoff with the United Farm Workers, which returned to the farm three years ago after a 20-year absence, demanding a new contract.

Read MoreThe peach farmer vs the labor union: hearing finally over

Co-owner Dan Gerawan balked, and so did some of his workers. In November 2013, they held a vote on whether to decertify the union. Those votes have been locked up by the state Agriculture Labor Relations Board, which has held a multimonth hearing over whether Dan Gerawan violated rules and pressured his employees to vote out the UFW.

After that vote, the same labor board that presided over the mediation (and which is investigating the vote) imposed a contract on Gerawan. Such a move is allowed under a California law called Mandatory Mediation and Conciliation (MMC) if no deal is reached through bargaining.

Gerawan challenged that contract in court and lost. Now, however, an appeals court has ruled in the farm's favor. (Tweet This)

"This is a significant victory for our employees, our family and the entire industry. The court's ruling vindicates our argument that no state agency should be able to unilaterally impose a contract on workers without a vote or force it on employers without their consent." -Dan Gerawan, co-owner, Gerawan farms

On the one hand, the court agreed with Dan Gerawan that the farmer should have been "given an opportunity to prove abandonment" by the UFW of his employees. The bigger issue, however, is that the court said the law is unconstitutional.

Read MoreCalifornia peach farmer, UFW slug it out at hearing

The state cannot impose a contract arbitrarily on a business in that manner because it "violates equal-protection principles and constitutes an improper delegation of legislative authority."

"This is a significant victory for our employees, our family and the entire industry," Dan Gerawan said in a statement. "The court's ruling vindicates our argument that no state agency should be able to unilaterally impose a contract on workers without a vote or force it on employers without their consent."

In its ruling, the court agreed with Gerawan's attorneys, who argued that while the state can set a minimum wage for all employees, the state "cannot constitutionally set different minimum wages for different companies (in the same industry) without a rational reason for doing so ... indeed, the whole point of the (Mandatory Mediation and Conciliation) statute is to single out one employer and create a special set of rules for that employer alone."

It's not clear what the ruling means, if anything, for the investigation into the vote to decertify the union, or whether the results of those votes will ever be revealed.

CNBC has reached out to the labor relations board and the UFW seeking comment on the ruling and whether they will appeal the ruling to the California Supreme Court. Neither was immediately available.

The Fresno Bee reported late Thursday, however, that the UFW planned to appeal the verdict to the California Supreme Court.