# North American Meat Institute v. Xavier Becerra

> District Court, C.D. California · November 22, 2019

URL: https://www.frixlaw.com/law-library/cases/10633941

## Case

- **Court:** District Court, C.D. California
- **Decided:** November 22, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10633941

## How later opinions describe it (automated extraction)

- stating that it is the Supreme Court’s “prerogative alone to overrule one of its precedents”
- explaining that such laws “face a virtually per se rule of invalidity”
- finding evidence from campaign “that Measure E was enacted in part because of—rather than despite—its impacts on articles of commerce flowing from Los Angeles and Los Angeles County” and concluding that this “constitutes evidence of a discriminatory intent”
- concluding that Christie’s “make[s]| clear that [the] extraterritoriality doctrine applies beyond statutes that regulate out-of-state prices’

## Opinion text

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.

Present: The Honorable CHRISTINA A. SNYDER
Catherine Jeang Not Present N/A
Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
Not Present Not Present
Proceedings: (IN CHAMBERS) - PLAINTIFF’S MOTION FOR PRELIMINARY
INJUNCTION (ECF No. 15, filed on October 4, 2019)
PROPOSED DEFENDANT-INTERVENORS’ MOTION TO
INTERVENE (ECF No. 25, filed on October 29, 2019)
I. INTRODUCTION
Plaintiff North American Meat Institute (“NAMI”), a national trade association of
meat packers and processors, filed this action against California Attorney General Xavier
Becerra, California Secretary of Food and Agriculture Karen Ross, and California
Director of Public Health Sonia Angell (collectively “California” or “the State”) on
October 4, 2019 to challenge the constitutionality and prevent the enforcement of
California Health & Safety Code § 25990(b), which California voters enacted as
Proposition 12 on November 6, 2018 (“Proposition 12”). See ECF No. 1 (“Compl.”).
The complaint alleges that Proposition 12 violates the Commerce Clause of the United
States Constitution by: (1) discriminating against out of state producers, distributors, and
sellers of pork and veal; (2) impermissibly regulating extraterritorial activities beyond
California’s borders; and (3) substantially burdening interstate commerce in a manner that
exceeds any legitimate local benefits. Compl. {J 44-90.
Along with its complaint, NAMI concurrently filed a motion for preliminary
injunction and several supporting fact declarations from its members. See ECF No. 15
The State of California filed an opposition to the PI motion on October 28, 2019.
See ECF No. 24 (“PI Opp.”). The next day, several animal welfare organizations—the
Humane Society of the United States, the Animal Legal Defense Fund, Animal Equality,
The Humane League, Farm Sanctuary, Compassion in World Farming USA, and

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
Compassion Over Killing (collectively the “Intervenors” or the “Proposed
Intervenors”)}—filed a motion to intervene as defendants pursuant to Federal Rule of Civil
Procedure 24, as well as a brief in opposition to NAMI’s PI motion. See ECF No. 25-1
(“MTT”), ECF No. 25-10 (“Int. PI Opp.”). NAMI filed a reply in support of its preliminary
injunction motion on November 4, 2019. See ECF No. 29 (“PI Reply”).
In addition to these submissions, the California Egg Farmers Association filed an
amicus brief in opposition to the motion for a preliminary injunction, see ECF No. 28
(“Egg Farmers Brief’), while the States of Indiana, Alabama, Arkansas, Kansas,
Louisiana, Missouri, Oklahoma, South Carolina, and Utah jointly filed an amicus brief in
support of the motion for a preliminary injunction, see ECF No. 40 (“States’ Brief”).
The Court held a hearing on November 18, 2019. Having carefully considered the
parties’ arguments, and the submissions of amici, the Court finds and concludes as
follows.
Il. RELEVANT BACKGROUND
The following facts are taken from the complaint, the declarations filed in support
of NAMI’s PI motion, the public record, and the submissions from the State and amici.
A. California Voters Enact Proposition 2 (2008)
In the November 2008 election, California voters passed Proposition 2, a ballot
initiative intended to “prohibit the cruel confinement of farm animals.” See Cal. Prop. 2 at
§ 2, as approved by voters (Gen. Elec. Nov. 4, 2008). The initiative passed with the support
of 63.42% of California voters. See Cal. Sec’y State, Statement of Vote: 2008 General
Election. Proposition 2 added §§ 25990-25994 to the California Health and Safety Code,
and took effect on January 1, 2015. See Cal. Health & Safety Code §§ 25990-25994. The
enacted provisions prohibit California farmers from tethering or confining pregnant pigs,
veal calves, and egg-laying hens in a way that prevented them from lying down, standing
up, fully extending their limbs, or turning around freely. Id. at §§ 25990, 25991(b).
B. California Enacts Assembly Bill 1437 (2010)
The California legislature subsequently enacted Assembly Bill 1437 (“AB 1437”) in
2010. AB 1437 added §§ 25995-97 to the Health and Safety Code. These provisions
prohibit selling eggs in California that are produced by hens confined under conditions that

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
do not meet the confinement requirements of Proposition 2. See Cal. Health & Safety Code
§§ 25995-97.
The legislative history supporting the statute stated that the regulation intended to
ensure that “all eggs sold for human consumption in California” would “conform to the
animal care standards” established by Proposition 2 in order to “protect California
consumer’s [sic] health and welfare.” See Bill Analysis of AB 1437, Cal. Assembly
Comm. on Agriculture (April 29, 2009). Specifically, studies “cited by the author state[d]
that egg-laying hens subjected to stress have a greater chance of carrying bacteria or
viruses, thus having a greater chance of exposing consumers to food borne bacteria and
viruses.” Id. at 1, 2. In addition to these consumer health and welfare concerns, the
legislative history notes that “[s|ome supporters” advocating for AB 1437 also “stated that
this bill will level the playing field for California egg producers to remain competitive with
out-of-state egg producers.” Id. at 1; see also Bill Analysis of AB 1437, Cal. Assembly
Comm. on Agriculture (May 13, 2009) (stating same). In the enrolled version of the bill,
the legislative findings state that it “is the intent of the Legislature to protect California
consumers from the deleterious, health, safety, and welfare effects of the sale and
consumption of eggs derived from egg-laying hens that are exposed to significant stress.”
Cal. Health & Safety Code § 25995.
A coalition of states challenged AB 1437’s sales ban pursuant to the commerce
clause of the United States Constitution, but their action was dismissed on jurisdictional
grounds. See Missouri ex rel. Koster v. Harris, 847 F.3d 646 (9th Cir. 2017). The states
then attempted to petition the Supreme Court pursuant to its original jurisdiction over
disputes between states, see U.S. Const., Art. IIT, § 2, but were denied. See Missouri v.
California, No. 22-O-148 (filed U.S. Dec. 4, 2017).
C. California Enacts Proposition 12 (2018)
In the November 2018 election, California voters passed Proposition 12 to amend
§§ 25990-93 of the California Health and Safety Code by adding § 25993.1. See Cal. Prop.
12 at § 1, as approved by voters (Gen. Elec. Nov. 6, 2018). The initiative passed with
62.7% of the vote. See Cal. Sec’y State, Statement of Vote: 2018 General Election. As
relevant here, Proposition 12 prohibits the sale in California of “whole veal meat” and
“whole pork meat” that a seller “knows or should know is the meat of a covered animal
who was confined in a cruel manner” as defined by Proposition 2. Cal. Health & Safety

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
Code §§ 25990(b)(1), (b)(2).! The prohibition deems that a sale occurs in California
“where the buyer takes physical possession” of the meat at issue in California. Id. at
§ 25991(0). Any person who violates Proposition 12’s sales prohibition is guilty of a
misdemeanor punishable by a fine of up to $1,000 and up to 180 days imprisonment. Id.
at § 25993(b).
Proposition 12 thus operates in a manner similar to AB 1437, except that Proposition
12 applies the animal confinement standards established by Proposition 2 to the in-state
sale of whole veal and whole pork products, whereas AB 1437 applies those standards to
the in-state sale of hen eggs.
According to the ballot language, Proposition 12 is intended “to prevent animal
cruelty by phasing out extreme methods of farm animal confinement, which also threaten
the health and safety of California consumers, and increase the risk of foodborne illness
and associated negative fiscal impacts on the State of California.” See Cal. Prop. 12 at § 1,
as approved by voters (Gen. Elec. Nov. 6, 2018). The State has yet to issue regulations

The Sixth Circuit reached the same conclusion in a similar case involving
disclosures related to agricultural production methods. See Int’] Dairy Foods Ass’n v.
Boggs, 622 F.3d 628, 649 (6th Cir. 2010) (holding that Ohio rule generally prohibiting
milk processors and distributors from using product labels advertising the absence of the
rbST hormone in milk production did not have a discriminatory effect because “the Rule
burdens Ohio dairy farmers and processors who do not use rbST in their production of milk
products to the same extent as it burdens out-of-state farmers and processors not using
rbST,” and, in fact, benefits “an out-of-state processor whose production includes the use
ofrbST .. . more than an Ohio processor who uses milk from cows not treated with rbST”).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
not any other. Id. at 335. Prior to the enactment of the North Carolina law, the State of
Washington had developed and popularized its own more rigorous and detailed apple
grading system that record evidence demonstrated was “equal to or superior to the USDA
grades in all corresponding categories,” and which had, as a result, “gained nationwide
acceptance in the apple trade.” Id. at 351, 352. The evidence demonstrated that
“Washington sellers would normally enjoy a distinct market advantage vis-a-vis local
producers” where the more exacting Washington grades applied, since Washington apples
tended to be of greater quality than those from North Carolina, and since the USDA grading
system did not capture these differences in quality. Id. at 351-52. In light of this evidence,
the Supreme Court struck down the North Carolina law, holding that it had a discriminatory
effect inter alia because it “stripp[ed] away from the Washington apple industry the
competitive and economic advantages it has earned for itself through its expensive
inspection and grading system,” and, consequently, “ha[d] a leveling effect which
insidiously operates to the advantage of local apple producers.” Id. at 351, 352.
Here, in contrast to Hunt, the only “competitive advantage” that NAMI contends
will be stripped away by Proposition 12 is a standard production method, available to any
meat processor in any state that allows it, to concentrate livestock in its facilities at certain
densities. See PI Reply at 7-8. The State of California just happens to have determined
that these practices are inhumane and harmful. This is not a competitive advantage—like
the higher quality products and creative marketing that, in Hunt, gave Washington apple
growers an advantage over North Carolina apple growers—but a regulatory safe harbor for
certain production methods that California, through its political process, has elected to
eliminate from meat sold into its market. See Rocky Mountain Farmers Union v. Corey,
730 F.3d 1070, 1092 (9th Cir. 2013) (“Rocky Mountain I’) (distinguishing Hunt and
holding that while plaintiff's decision to locate its ethanol plant with “[a]ccess to cheap
electricity is an advantage,” the advantage “was not ‘earned’ in the sense meant by Hunt
simply because” the regulatory alternative preferred by plaintiff “imposed the hidden costs
of GHG emissions on others,” rather than on the plaintiff, as the challenged regulation
proposed to do); E. Kentucky Res. v. Fiscal Court of Magoffin Cty., Ky., 127 F.3d 532,
544 (6th Cir. 1997) (“The Commerce Clause is not a safety valve for those who are simply
political process losers.”’).
At bottom, what NAMI characterizes as a competitive advantage is ultimately just a
preferred method of production. But it is well-established that “the dormant Commerce
Clause does not . . . guarantee Plaintiffs their preferred method of operation.””’ Optometrists
II, 682 F.3d at 1151 (citing Exxon Corp., 437 U.S. at 123-27). For example, in the first

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
appeal of Optometrists II, the Ninth Circuit held that even where the challenged law
“deprived” the plaintiff opticians “of one eyewear sales method” that “affords [them] a
sales advantage,” the Commerce Clause was not violated because the plaintiffs “were not
precluded from operating in California” and only needed to comply with the law, and adopt
one of the sales methods it permitted, as did every other seller. See Nat’l Ass’n of
Optometrists & Opticians LensCrafters, Inc. v. Brown, 567 F.3d 521, 528 (9th Cir. 2009)
(“Optometrists I’).
Even to the extent NAMI members’ current processing practices actually confer a
cognizable competitive advantage that Proposition 12 threatens, the loss of that asserted
advantage would not be discriminatory: the cost of retrofitting their facilities to comply
with Proposition 12 “may be” a burden—and an understandably expensive one—‘but it is
an equal-opportunity” burden and “not a protectionist measure burdening only the
operators of foreign facilities.” Maharg, Inc. v. Van Wert Solid Waste Mgmt. Dist., 249
F.3d 544, 553 (6th Cir. 2001) (holding that county surcharge did not have a discriminatory
effect over objection that, per Hunt, surcharge eliminated plaintiff's competitive
advantage).°
Nor is the Court persuaded by NAMI’s remaining arguments that (1) Proposition 12
has a discriminatory effect because in-state producers had six years to comply with
Proposition 2’s animal confinement regulations, whereas out of state NAMI members may,
in some respects, have less “lead time,’” or that (ii) Proposition 12 has a discriminatory

NAMI’s reliance on Baldwin v. G.A_F. Seelig, Inc., 294 U.S. 511, 527 (1935) and
Cloverland-Green Spring Dairies, Inc. v. Pennsylvania Milk Marketing Board, 298 F.3d
201, 213 (3d Cir. 2002), which applies Baldwin, is misplaced. See PI Reply at 8. As
discussed further below, courts including the Supreme Court distinguish the application of
the per se rule in those cases because they involve challenges to price-setting statutes. See
infra § IV.B.2. Whether, for example, the law in Cloverland-Green is styled as an
impermissible attempt to export a “minimum price floor” pursuant to Baldwin, or an
impermissible attempt to strip away a competitive pricing advantage pursuant to Hunt, a
material factor in both analyses is the price-setting nature of the challenged regulations—
a factor not present here.
7 The Court acknowledges that, in this respect, the present facts could be
distinguishable from those raised in Eleveurs. In that case, the sales prohibition came into
effect against in-state and out-of-state producers at the same time, so the “lead time”

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
effect because regulators may construe the sales prohibition to exempt “bob” veal that is
almost exclusively culled from California dairy farms. See PI at 10-11; PI Reply at 4-5, 8-
9. These arguments are premature. As the parties acknowledge, California has yet to issue
any regulations implementing Proposition 12. See PI at 5. Those regulations might, or
they might not, have the “potential” discriminatory effects that NAMI contends they could.
See PI at 10. But at this juncture, the speculative possibility that state regulators may

allotted for compliance was not an issue in the discrimination analysis. By contrast,
because aspects of Proposition 12 that apply pre-existing provisions of Proposition 2 to
out-of-state producers may give those out-of-state producers less lead time for compliance
than Proposition 2 gave in-state producers, plaintiffs could have an arguable basis to claim
that Proposition 12 discriminates against out-of-state commerce. However, as discussed
below, the Court concludes that this argument is premature prior to the release of the
relevant implementing regulations.
8 At oral argument, counsel for the State expressed that he “expects” the forthcoming
regulations to implement compliance deadlines that comport with the dates set forth by
Cal. Health & Safety Code § 25991(e). However, the compliance dates set forth by that
provision only relate to new minimum square footage requirements that Proposition 12
established for the first time in 2018. Id. at § 25991(e)(2)-(3). Even assuming, therefore,
that the effective dates set forth by the statute will be the dates that the pending
implementing regulations apply—and counsel for the State could not confirm with
certainty that they would be—California farmers, as well as out-of-state farmers, will have
the same amount of “lead time” to comply with these new minimum square footage
requirements.
Moreover, although Proposition 12 also requires out-of-state farmers and meat
packers who sell into California to comply with Proposition 2’s pre-existing prohibitions
against confining a covered animal “in a manner that prevents such animal from lying
down, standing up, fully extending his or her limbs,” or “turning around freely” —standards
that California farmers and meat packers had six years with which to comply when they
were first enacted—Proposition 12 is silent as to when these requirements shall effectively
apply to in-state sales by out-of-state farmers and meat packers. See Cal. Health & Safety
Code § 25991(e)(1) (recodifying the standards set by Proposition 2 within the framework
established by Proposition 12); see_also Cal. Atty Gen., Initiative No. 17-0026 at 2-4
(received Aug. 29, 2017) (text of Proposition 12’s amendments to Cal. Health & Safety
Code §§ 25990-25993.1). The only compliance dates set forth by Proposition 12 relate to

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
interpret and apply Proposition 12 in a manner that NAMI argues will impose
discriminatory effects upon its out-of-state members does not raise any serious questions
that justify a preliminary injunction.®

For the reasons discussed above, the Court concludes that NAMI’s discriminatory
effect claim fails to raise any questions on the merits that would support the issuance of a
preliminary injunction.

the new requirements addressed above. It is therefore premature, prior to the issuance of
regulations implementing the application of these pre-existing prohibitions, to know
whether or not out out-of-state farmers and meat packers will be granted less (or more)
“lead time” to comply with the pre-existing prohibitions than the in-state farmers received
after the passage of Proposition 2, and thus premature to determine whether a discrepancy
in the lead time allotted, if any, amounts to discrimination in violation of the commerce
clause.
° Prematurity aside, the Court is also less than sanguine about the merits of NAMI’s
“lead time” argument. For one thing, NAMI cites no case law for the proposition that a
statute can have a discriminatory effect if a prior statute, imposing the same regulatory
obligations, gives in-state entities more time to comply. Also, as intervenors’ counsel
raised at oral argument, some out-of-state producers began to comply with the pre-existing
requirements imposed on California producers by Proposition 2 well-before voters enacted
Proposition 12 to apply those requirements to out-of-state producers that sell into the
California market. See Ikizler Decl., 22 (reproducing 2014 statement from Tyson Foods
“urg|ing]” its pork producing members to “allow sows of all sizes to stand, turn around, lie
down and stretch their legs,” mirroring the requirements established by Proposition 2 and
incorporated into Proposition 12), § 49 n. 62 (citing to United Egg Producers’ statistics
indicating that many out-of-state egg producers are already “currently compliant” with
Proposition 12’s requirements). This is not surprising, given that Massachusetts and the
European Union also enacted comparable animal confinement standards in the years
between the passage of Proposition 2 and Proposition 12. See id., 42-44 (discussing the
timing and practical effects of the confinement laws in those jurisdictions).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
(2) Direct Regulation Of Extraterritorial Conduct Claim
NAMI next claims that Proposition 12 attempts to “impose confinement standards
for farm animals located outside California” in violation of “the extraterritoriality
doctrine.” PI at 18. This is the doctrine applied by the Supreme Court in three cases
involving state statutes that attempted to fix the prices for products sold out of state:
Baldwin v. G.A_F. Seelig, Inc., 294 U.S. 511 (1935), Brown—Forman Distillers Corp. v.
NY. State Liquor Authority, 476 U.S. 573 (1986), and Healy v. Beer Institute, 491 □□□□
324 (1989). In each of these cases, the Supreme Court struck down the pricing laws for
attempting to regulate “commerce occurring wholly outside [their states’| boundaries.”
Healy, 491 U.S. at 336.
The Supreme Court has since indicated that the extraterritoriality doctrine’s
application is essentially limited to cases involving the sorts of price-setting statutes that
those cases addressed. See Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 669
(2003). In Walsh, the Supreme Court considered a Maine law authorizing the state to
negotiate with drug manufacturers to obtain rebates on prescription drugs for Medicaid
recipients. Where the state could not obtain an agreement from a manufacturer, the law
provided that the manufacturer’s in-state Medicaid sales would become subject to a “prior
authorization” procedure administered by the state. Id. at 649-50. The Supreme Court
rejected the argument that the provision was per se invalid pursuant to the extraterritoriality
doctrine, holding that “[t]he rule that was applied in Baldwin and Healy” was “not
applicable” to the Maine statute because, “unlike [the] price control or price affirmation
statutes” in those cases, “the Maine Act does not regulate the price of any out-of-state
transaction, either by its express terms or by its inevitable effect,” “does not insist that
manufacturers sell their drugs to a wholesaler for a certain price,” and does “not t[1e] the
price of its in-state products to out-of-state prices.” Id. at 669.
Following Walsh, the Ninth Circuit has held that the doctrine is “not applicable to a
statute that does not dictate the price of a product and does not tie the price of its in-state
products to out-of-state prices.” Chinatown Neighborhood Ass’n v. Harris, 794 F.3d 1136,
1146 (9th Cir. 2015) (quoting Eleveurs, 729 F.3d at 951): accord Epel, 793 F.3d at 1173-
75 (Gorsuch, J.) (holding that “the Supreme Court has emphasized as we do that the
Baldwin line of cases concerns only ‘price control or price affirmation statutes’ that involve
“tying the price of . . . in-state products to out-of-state prices,’” and rejecting application of
doctrine to statute that “isn’t a price control statute” and “doesn’t link prices paid in
Colorado with those paid out of state’); IMS Health Inc. v. Mills, 616 F.3d 7, 29-30 □□□□

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
Cir. 2010) (holding that the doctrine only applied to price-setting laws, and refusing to
apply the doctrine to a state law regulating the disclosure and transmission of patient
identifying information for marketing purposes), vacated on other grounds, 131 S. Ct. 3091
(2011).!°
NAMI does not contend that Proposition 12 attempts to control the price of veal or
pork, or link prices paid for veal or pork in California to those paid out of state. There is
therefore no question that, were the limitation recognized by Walsh and adopted by
Eleveurs and Chinatown Neighborhood applied, the extraterritoriality doctrine would have
no application to this case. Instead, NAMI argues that these cases misread Walsh, and that
the Ninth Circuit’s en banc decision in Sam Francis Foundation v. Christie’s, Inc., 784 F.3d
1320 (9th Cir. 2015) (en banc) supersedes the extraterritoriality holding in Eleveurs, and
renders the portion of the panel decision addressing the scope of the doctrine in the
subsequently-decided Chinatown Neighborhood case contrary to circuit precedent. See PI

0 In addition to concluding that the Supreme Court has strictly limited the
extraterritoriality doctrine, some judges and commentators have questioned the
extraterritoriality doctrine’s continued vitality. See Am. Beverage Ass’n v. Snyder, 735
F.3d 362, 381 (6th Cir. 2013) (Sutton, J., concurring) (observing that there is not “a single
Supreme Court dormant Commerce Clause holding’—Healy, Brown-Forman, and
Baldwin included—‘that relied exclusively on the extraterritoriality doctrine to invalidate
a state law,” and concluding that, in light of the manifold changes in the way interstate
commerce is actually conducted, the extraterritorial doctrine has become “a relic of the old
world with no useful role to play in the new’); Epel, 793 F.3d at 1175 (Gorsuch, J.)
(characterizing the extraterritoriality doctrine as the “the most dormant. . . in all of dormant
commerce clause jurisprudence,” expressing concerns that the doctrine “risks serious
problems of overinclusion,” and suggesting that the Baldwin line of cases might be better
understood as “instantiations . . . of the antidiscrimination rule” rather than “a distinct line
of dormant commerce clause jurisprudence’’); IMS Health, 616 F.3d at 29 n.27 (same); see
also Brannon P. Denning, Extraterritoriality and the Dormant Commerce Clause: A
Doctrinal Post-Mortem, 73 La. L. Rev. 979, 998-99 (2013), and, Jack L. Goldsmith &
Alan O. Sykes, The Internet and the Dormant Commerce Clause, 110 Yale L.J. 785, 806
& n. 90 (2001) (both discussed in Epel and American Beverage). Because the Supreme
Court has not expressly overruled the doctrine, the Court analyzes its application here. See
State Oil Co. v. Khan, 522 U.S. 3, 20 (1997) (stating that it is the Supreme Court’s
“prerogative alone to overrule one of its precedents”).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
Reply at 12-13 (also citing Daniels Sharpsmart, Inc. v. Smith, 889 F.3d 608 (9th Cir. 2018),
a panel decision applying the extraterritoriality doctrine following Christie’s, for the
proposition that the extraterritoriality doctrine continues to apply in cases not involving
price-setting statutes).
Christie’s concerned a California law that required “the payment of royalties to the
artist after a sale of” that artist’s “fine art whenever ‘the seller resides in California or the
sale takes place in California.’” Christie’s, 784 F.3d at 1323. The en banc panel held that
the first clause violated the dormant Commerce Clause, as it applied to out of state sales,
because “[t]hose sales have no necessary connection with the state other than the residency
of the seller.” Id, The Court quoted Healy for the proposition that the “Commerce Clause
precludes the application of a state statute to commerce that takes place wholly outside of
the State’s borders, whether or not the commerce has effects within the State.” Id. (internal
quotation marks omitted) (emphasis added). Although the opinion distinguished Eleveurs
on its facts—explaining that that case “concerned state laws that regulated in-state conduct
with allegedly significant out-of-state practical effects” rather than “regulation of wholly
out of state conduct,” id. at 1324—1t did not address, let alone reject, the legal proposition
stated in Eleveurs, and applied in Walsh, that the extraterritoriality doctrine had been, or
is, limited in its application to price-setting laws.
Whether or not Christie’s implicitly revived the extraterritoriality doctrine’s
application to non-price regulations—a proposition the Court hesitates to accept given the
en banc panel’s silence, the Supreme Court’s holding in Walsh, and the persuasive opinions
in Epel and American Beverage, discussed above—NAMI arguably has, at the very least,
raised an argument that the doctrine could apply to Proposition 12. See e.g., Publius v.
Boyer-Vine, 237 F. Supp. 3d 997, 1023-24 (E.D. Cal. 2017) (concluding that Christie’s
“make[s]| clear that [the] extraterritoriality doctrine applies beyond statutes that regulate
out-of-state prices’).
But the next step is to ask whether there is any serious contention that Proposition
12 violates the extraterritoriality rule as applied in Christie’s. And on this question, there
can be no dispute: Christie’s holds that a state regulation violates the extraterritoriality
doctrine only if it regulates conduct that takes place “wholly outside” a state’s jurisdiction,
and not if it regulates “in-state conduct with allegedly significant out-of-state practical
effects.” Christie’s, 784 F.3d at 1323-24. Pursuant to this rule, and like the statutes upheld
in the cases that Christie’s distinguishes, Proposition 12’s in-state sales prohibition only
applies to “in-state conduct”—-sales of meat products in California—not conduct that takes

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
place “wholly outside” California. Id. It is accordingly a perfectly lawful exercise of
California’s “state sovereignty protected by the Constitution.” Rocky Mountain Farmers
Union v. Corey, 913 F.3d 940, 952 (9th Cir. 2019) (“Rocky Mountain IT’) (citing Christie’s
and holding that “regulations that have upstream effects on how sellers who sell to
California buyers produce their goods” are not “necessarily extraterritorial,’ and that
“subjecting both in and out-of-jurisdiction entities to the same regulatory scheme to make
sure that out-of-jurisdiction entities are subject to consistent . . . standards is a traditional
use of the State’s police power” that does not violate the extraterritoriality principle); see
also Chinatown Neighborhood Ass’n, 794 F.3d at 1145 (holding that laws like Proposition
12 consistently “pass[ ] Commerce Clause muster”—‘“‘even when” the law in question “has
significant extraterritorial effects’—because “those effects result from” the legitimate
“regulation of in-state conduct); Publius, 237 F. Supp. 3d at 1023 (concluding that because
“Walsh, [Eleveurs], and [Rocky Mountain] all concerned state laws that regulated in-state
conduct which were found not to directly regulate extraterritorial behavior,” the
extraterritoriality doctrine “was inapplicable” in those cases).!"

1 C & A Carbone, Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383, (1994),
discussed in NAMI’s briefing and at oral argument, does not suggest otherwise. Carbone
involved a challenge to the defendant’s “flow control” ordinance that required all
municipal waste to be processed by a facility located within the town’s boundaries.
However, the Supreme Court struck down the law in Carbone on grounds that it had a
discriminatory purpose and effect, not that it violated the extraterritoriality doctrine. Id. at
386-87, 391-92 (holding that “flow control ordinance discriminates” since its “avowed
purpose” was to “retain the processing fees” over local wastewater, and since the
ordinance’s effect was to “allow|[]| only the favored operator to process waste that is within
the limits of the town”). The language in the Carbone opinion that NAMI relies upon—
that “States and localities may not attach restrictions to exports or imports in order to
control commerce in other States” since doing so “would extend the town’s police power
beyond its jurisdictional bounds,” id. at 393 (citing Baldwin, 294 U-S. at 511)—is dicta
summarizing the rule set forth by Baldwin. Even if that principle were not restricted by
the Supreme Court’s subsequent decision in Walsh, the applicable version of the Baldwin
(and Healy) rule is the one stated in Christie’s, applied in Rocky Mountain IJ, and analyzed
above: a state regulation violates the extraterritoriality doctrine if it regulates conduct that
takes place “wholly outside” a state’s jurisdiction, but not if it regulates “in-state conduct
with allegedly significant out-of-state practical effects.” Christie’s, 784 F.3d at 1323-24.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
The Court accordingly concludes that NAMI has not raised any serious questions on
the merits of its extraterritoriality claim.
(3) Substantial Burden On Interstate Commerce Claim
NAMI claims that even if Proposition 12 is not discriminatory or an impermissible
direct regulation of extraterritorial conduct, it should still be struck down pursuant to Pike
v. Bruce Church, Inc., 397 U.S. 137 (1970) because “the burden [it] impose[s] on
[interstate] commerce is clearly excessive in relation to the putative local benefits.” Id. at
142. “[U]nder Pike, a plaintiff must first show that the statute imposes a substantial burden
before the court will ‘determine whether the benefits of the challenged laws are illusory,””
or otherwise inadequate, to justify the burden. Eleveurs, 729 F.3d at 951-52 (quoting
Optometrists II, 682 F.3d at 1155).
“{Mlost statutes that impose a substantial burden on interstate commerce do so
because they are discriminatory” or purport to regulate extraterritorially, as discussed
above. Id. at 952 (citing Optometrists I], 682 F.3d at 1150); see Smitch, 20 F.3d at 1015
(stating that the Supreme Court has focused on “certain types of impacts,” including
“impacts on commerce beyond the borders of the defendant state, and impacts that fall
more heavily on out-of-state interests”). “[L]ess typically,” courts have found that non-
discriminatory, non-extraterritorial statutes may still “impose significant burdens on
interstate commerce” when they cause the “inconsistent regulation of activities that are
inherently national or require a uniform system of regulation.’” Id. (quoting Optometrists
Il, 682 F.3d at 1148). The need for uniformity generally arises in challenges to laws
affecting “interstate transportation”—such as cases that cause “disruption of travel and
shipping,” Smitch, 20 F.3d at 1015—as well as cases involving sports leagues. See
Eleveurs, 729 F.3d at 952 (observing that “examples of ‘courts finding uniformity

Also, to the extent the Seventh Circuit’s decision in Legato Vapors, LLC v. Cook,
847 F.3d 825 (7th Cir. 2017) suggests that the extraterritoriality principle nevertheless
prohibits states from regulating production methods, rather than the products themselves,
that is not the law of this circuit, and inconsistent with the Ninth Circuit’s precedents in the
low carbon fuel standard cases. See, e.g., Rocky Mountain II, 913 F.3d at 952 (reaffirming
prior holding that “regulations that have upstream effects on how sellers who sell to
California buyers produce their goods” survived scrutiny under the dormant commerce
clause) (emphasis added).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
necessary’ fall into the categories of ‘transportation’ or “professional sports leagues’”)
(citing Valley Bank of Nevada v. Plus Sys., Inc., 914 F.2d 1186, 1192 (9th Cir. 1990)).
The Ninth Circuit has held that “a regulation [which] does not regulate activities that
inherently require a uniform system of regulation and does not otherwise impair the free
flow of materials and products across state borders . . . is not a significant burden on
interstate commerce.” Optometrists II, 682 F.3d at 1154-55.
At the outset, the Court finds—and NAMI appears to acknowledge—that
Proposition 12 does not present the potential for the inconsistent regulation of activities
that require a uniform system of regulation. Id. at 15 (ceding the argument, but contending
that “interference with uniform operations” is “not the only way|]” to demonstrate a
substantial burden). Instead—and setting aside the discrimination and extraterritoriality
arguments already addressed and rejected above—NAMI contends and submits affidavits
to the effect that Proposition 12 will substantially burden interstate commerce because it
“will likely drive many farmers, packers, and processors from the California market” and
“force those who remain to bear increased costs” to comply with California’s animal
confinement standards. See PI Reply at 16-17.!* But, as discussed above in connection
with NAMI’s discriminatory effects argument, these anticipated effects do not demonstrate
that Proposition 12 will interfere with the flow of veal or pork products into California
inasmuch as they demonstrate NAMI’s disappointment that Proposition 12 “precludes a
preferred, more profitable method of operating in a retail market.” Optometrists II, 682
F.3d at 1154. As with the optometrists and opticians who challenged the regulation upheld
in Optometrists I and Optometrists II, “any” farmer, packer, or processor “remains free to
import [their products] originating anywhere into California and sell it there.” Optometrists
II, 682 F.3d at 1155 (holding that the challenged regulation did not substantially burden
interstate commerce pursuant to Pike as a result).
This conclusion 1s consistent with the Supreme Court’s decision in Pike itself, which
held that an order by an Arizona state agricultural official requiring a cantaloupe farmer to
package his harvested cantaloupes within the state, and not across the border in California,
violated the dormant commerce clause. See Pike, 397 U.S. at 145. NAMI cites to the facts
in Pike for the proposition that a state rule may substantially burden interstate commerce
if it has “the practical effect .. . to compel [a] company to build packing facilities . . . that

NAMI’s counsel relied exclusively on these affidavits at oral argument to contend
that Proposition 12 imposes a “substantial burden” on interstate commerce.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
would take many months to construct and would cost approximately $200,000.” Id. at 140.
Compare Bakke Decl. § 11, Catelli Decl. §] 8-10, Friesen Decl. □□ 9-10, Darrell Decl.
{| 10-15, Neff Decl. 4] 4-13, Rennells Decl. {fj 9-16, Turner Decl. §] 8-17, Bollum Decl.
5-11 (attesting that compliance with Proposition 12 would require NAMI members to
expend millions of dollars over many months, or years, to construct or redesign their
facilities). Although the proposition NAMI cites is a correct factual statement of the burden
imposed by the Arizona order at issue, the reason that order interfered with interstate
commerce is that it effectively required cantaloupe producers to consolidate every stage of
cantaloupe production within Arizona as a condition upon doing business across state lines.
See Pike, 397 U.S. at 145 (explaining that “the Court has viewed with particular suspicion
state statutes requiring business operations to be performed in the home State that could
more efficiently be performed elsewhere’).
Proposition 12 imposes no similar barrier to conducting commerce across state lines:
it is directed to how meat products are produced, not where, and compliance with
Proposition 12 does not require a farmer, packer, or processor to move its operations to
California. To the contrary, the regulation applies evenly no matter where production takes
place. The gravamen of NAMI’s “substantial burden” argument is therefore ultimately a
complaint about the cost of complying with Proposition 12’s requirements. However,
“{d]jemonstrating that state regulations impose substantial costs on interstate operations 1s
not sufficient to establish a burden calling for balancing under Pike.” S. Pac. Transp. Co.
v. Pub. Utilities Comm’n of State of Cal., 647 F. Supp. 1220, 1227 (N_D. Cal. 1986), aff'd,
820 F.2d 1111 (9th Cir. 1987) (citing Bibb v. Navajo Freight Lines, 359 U.S. 520, 526
(1959) and Burlington Northern Railroad Co. v. Department of Public Service, 763 F.2d
1106, 1114 (9th Cir. 1985) (“The claims by Burlington Northern that operation of the
Browning station results in a loss to the company does not, without more, suggest that the
Montana statute impedes substantially the free flow of commerce from state to state.”)).
Because there is no serious argument that Proposition 12 imposes any substantial
burden on interstate commerce, as that term 1s understood, the Court concludes that NAMI
has not raised a serious question as to its Pike claim.

For the reasons discussed in this section, the Court concludes that NAMI fails to
raise any questions on the merits of its three commerce clause claims that would support
the issuance of a preliminary injunction.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘OQ’
Case No. 2:19-CV-08569-CAS (FFMx) Date November 22, 2019
Title N. AMERICAN MEAT INSTITUTE V. BECERRA, ET AL.
2. Remaining Preliminary Injunction Factors
The Court recognizes that complying with Proposition 12 could impose potentially
significant costs upon at least some NAMI members. See, e.g., Bakke Decl. § 11, Catelli
Decl. □□ 8-10, Friesen Decl. 4 9-10, Darrell Decl. 10-15, Neff Decl. fj 4-13, Rennells
Decl. {§ 9-16, Turner Decl. J 8-17, Bollum Decl. 5-11. Since the Eleventh Amendment
may prevent the recovery of these costs, the Ninth Circuit has held that these potentially
noncompensable money damages can constitute irreparable injury. See California
Pharmacists Ass’n v. Maxwell-Jolly, 563 F.3d 847, 852 (9th Cir. 2009), vacated on other
grounds, 565 U.S. 606 (2012) (holding that money damages are irreparable where a
plaintiff can “obtain no remedy in damages against the state because of the Eleventh
Amendment”); accord Video Gaming Techs., Inc. v. Bureau of Gambling Control, 356 F.
89, 93 (9th Ci. 2009) (holding that “monetary injuries may
be irreparable if Eleventh Amendment sovereign immunity will bar a party from ever
recovering those damages in federal court’).
However, in light of the Court’s conclusion that there are no serious questions
regarding the merits of NAMI’s constitutional challenge, the Court declines to address
NAMI’s arguments on the remaining irreparable harm and balance of hardships factors.
See Global Horizons, Inc. v. United States DOL, 510 F.3d 1054, 1058 (9th Cir. 2007)
(“Once a court determines a complete lack of probability on the success or serious
questions going to the merits, its analysis may end, and no further findings are necessary.”).
NAMI’s motion for a preliminary injunction is DENIED.
V. CONCLUSION
In accordance with the foregoing, the Court GRANTS intervenors’ motion to
intervene in this action, and DENIES plaintiff's motion for preliminary injunction.
IT IS SO ORDERED.
00:00
CMJ

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10633941. Public record. Not legal advice.