Case 3:19-cv-02324-W-AHG Document 37 Filed 04/27/20 PageID.628 Page 1 of 12
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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` Case No.: 19-cv-02324 W (AHG)
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`ORDER:
`(1) GRANTING DEFENDANTS’
`MOTION TO DISMISS [DOC. 18];
`AND
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`(2) GRANTING DEFENDANT-
`INTERVENORS’ MOTION FOR
`JUDGMENT ON THE PLEADINGS
`[DOC. 19.]
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`NATIONAL PORK PRODUCERS
`COUNCIL & AMERICAN FARM
`BUREAU FEDERATION,
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`Plaintiffs,
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`v.
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`KAREN ROSS, in her official capacity as
`Secretary of the California Department of
`Food and Agriculture, SONIA ANGELL,
`in her official capacity as Director of the
`California Department of Public Health,
`and XAVIER BACERRA, in his official
`capacity as Attorney General of
`California,
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`Defendants,
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`THE HUMAN SOCIETY OF THE
`UNITED STATES; ANIMAL LEGAL
`DEFENSE FUND; ANIMAL
`EQUALITY; THE HUMAN LEAGUE;
`FARM SANCTUARY; COMPASSION
`IN WORLD FARMING USD; and
`COMPASSION OVER KILLING
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`Defendant-Intervenors.
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`Case 3:19-cv-02324-W-AHG Document 37 Filed 04/27/20 PageID.629 Page 2 of 12
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`Pending before this Court are Defendants’ motion to dismiss and Defendant-
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`Intervenors’ motion for judgment on the pleadings. The Court decides the matters
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`without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons that
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`follow, the Court GRANTS Defendants’ motion to dismiss [Doc. 18] and Defendant-
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`Intervenors’ motion for judgment on the pleadings [Doc. 19] with leave to amend.
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`I.
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`BACKGROUND
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`National Pork Producers Council & American Farm Bureau Federation
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`(collectively “Plaintiffs”) file this case against Defendants Karen Ross, in her official
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`capacity as Secretary of California Department of Food and Agriculture, Sonia Angell, in
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`her official capacity as Director of the California Department of Public Health, and
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`Xavier Bacerra, in his official capacity as Attorney General of California (collectively
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`“Defendants”). Plaintiffs file this action for declaratory and injunctive relief and allege
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`California’s Proposition 12 violates the Commerce Clause of the U.S. Constitution.
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`A. Procedural Background
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`This case was initially filed on December 5, 2019. (Compl. [Doc. 1].) On January
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`9, 2020 Defendant-Intervenors’ motion to intervene was granted. [Doc. 17.] On January
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`10, 2020, Defendants filed a motion to dismiss for failure to state a claim. [Doc. 18.]
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`That same day Defendant-Intervenors filed a motion for judgment on the pleadings.
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`[Doc. 19.] Plaintiffs filed an opposition to these motions on February 28, 2020. [Doc.
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`On January 29, 2020, California Egg Farmers filed a supplemental Amicus Brief in
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`support of the Defendants’ motion to dismiss and Defendant-Intervenors’ motion for
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`judgment on the pleadings. [Doc. 25.] A supplemental Amicus Brief in support of the
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`Plaintiffs was filed on March 10, 2020, by the States of Alabama, Arkansas, Indiana,
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`Iowa, Kansas, Louisiana, Missouri, Nebraska, Ohio, Oklahoma, South Carolina, South
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`Dakota, Texas, Utah, and West Virginia. [Doc. 32.]
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`Case 3:19-cv-02324-W-AHG Document 37 Filed 04/27/20 PageID.630 Page 3 of 12
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`B. Factual Background
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`Plaintiffs allege Proposition 12 violates the Commerce Clause of the U.S.
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`Constitution because it reaches extraterritorially and imposes substantial burdens on
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`interstate commerce. (Compl. ¶ 31.) Plaintiffs seek a declaration that Proposition 12
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`violates the Commerce Clause and seek an injunction against the enforcement of
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`Proposition 12’s requirements concerning pork. (Id. ¶¶ 31, 32.)
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`Proposition 12 is a ballot initiative passed in November 2018 that amended the
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`California Health and Safety Code. (Id. ¶ 14.) Proposition 12 regulates the production of
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`veal, pork, and eggs. (Id. ¶ 33.) Importantly for this case, it forbids the sale in California
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`of pork meat from the hogs born of sows (female pigs) not housed in conformity with the
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`law’s requirements. (Id. ¶ 21.) The law “requires that a sow cannot be confined in such a
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`way that it cannot lie down, stand up, fully extend its limbs, or turn around without
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`touching the side of its stall or another animal.” (Id. ¶ 23.) This requirement, known as
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`the stand up-turn around requirement, “requires producers to house their sows together in
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`a group, referred to as ‘group housing.’” (Id. ¶¶ 23, 24.) In contrast, individual stalls
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`each hold one sow and do not allow sows to turn around. (Id. ¶ 24.) Thus, Proposition
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`12 bans the use of individual stalls that do not meet the stand up-turn around space
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`requirements. (Id. ¶25.)
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`The U.S. Department of Agriculture’s Census of Agriculture for 2017 estimates
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`nearly 65,000 farms nationwide sold hogs for a market value of $26 billion. (Id. ¶ 3.)
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`Pigs are raised throughout the country with a majority of production concentrated in the
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`Midwest and North Carolina. (Id. ¶ 5.) A small percentage of farms are structured as
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`“wean to finish,” meaning the pigs are held at the same farm throughout the production
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`process. (Id. ¶ 145.) However, a majority of the production of pork comes from a
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`segmented production chain. (Id. ¶ 138.) Sows give birth to piglets on sow-specific
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`farms where the piglets are raised for about three weeks before they are weaned at
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`approximately 10 pounds. (Id. ¶ 8.) After weaning, piglets are generally moved to
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`nursery farms for about six to eight weeks. (Id. ¶¶ 142, 143.) At six to eight weeks
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`piglets have grown into “feeder pigs” and are “transferred again to separate finishing
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`facilities.” (Id. ¶ 143.) Pigs spend 16 to 17 weeks at the finishing farms before being
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`sent to markets and packers where the pigs are slaughtered. (Id. ¶ 144.) Packers
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`slaughter and butcher the market hogs and sell the pork to wholesalers or retailers, which
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`then distribute to consumers. (Id. ¶ 124.) Pork product from one hog is cut into primals,
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`or different cuts of meat, and then shipped to different end users across the country. (Id.
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`¶ 96.)
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`Beginning December 31, 2021, Proposition 12 requires each sow whose offspring
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`is intended to be sold into California be allotted at least 24 square feet in the group pen.
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`(Id. ¶ 26.) However, Proposition 12 has an immediate impact on what producers must do
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`now given the time needed for building and production changes. (Id.) Plaintiffs allege
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`these requirements are “inconsistent with industry practice and standards, generations of
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`producer experience, scientific research, and standards set by other states.” (Id. ¶ 28.)
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`Plaintiffs also allege these requirements impose costly mandates on producers that
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`interfere with commerce among the states and impose costs on pork producers that will
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`ultimately increase costs for American consumers. (Id.)
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`In California, there are an estimated 8,000 breeding sows and “1,500 out of
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`California’s 8,000 sows are used in commercial breeding” which produces around 30,000
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`offspring a year. (Id. ¶¶ 16, 17.) However, “California’s pork consumption makes up
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`about 13 percent of the national market.” (Id. ¶ 20.) As a result, California’s in-state sow
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`breeding does not supply the demand of pork consumption in the state. (Id.) Thus, the
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`offspring of approximately “673,000 sows is required to satisfy California consumers’
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`demand for pork meat annually.” (Id.)
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`Plaintiffs claim that by imposing these requirements on an industry that is national
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`in scope, Proposition 12 unconstitutionally interferes with the functioning of a $26 billion
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`a year interstate industry. (Id. ¶ 303.) In addition, Plaintiffs claim that compliance with
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`Proposition 12 will require new and less efficient methods of animal husbandry that will
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`increase operating, staff training and veterinary costs. (Id. ¶ 322.) As a result, Plaintiffs
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`allege producers may be forced to comply with Proposition 12 standards even if most of
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`their product is not bound for California. (Id. ¶¶ 339, 347.)
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`II. LEGAL STANDARD
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`The Court must dismiss a cause of action for failure to state a claim upon which
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`relief can be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6)
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`tests the legal sufficiency of the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51
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`F.3d 1480, 1484 (9th Cir. 1995). A complaint may be dismissed as a matter of law either
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`for lack of a cognizable legal theory or for insufficient facts under a cognizable theory.
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`Balisteri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990). In ruling on the
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`motion, a court must “accept all material allegations of fact as true and construe the
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`complaint in a light most favorable to the non-moving party.” Vasquez v. L.A. Cnty.,
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`487 F.3d 1246, 1249 (9th Cir. 2007).
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`A complaint must contain “a short plain statement of the claim showing that the
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`pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Supreme Court has interpreted
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`this rule to mean that “[f]actual allegations must be enough to raise a right to relief above
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`the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007). The
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`allegations in the complaint must “contain sufficient factual matter, accepted as true, to
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`‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
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`(2009) (quoting Twombly, 550 U.S. at 570).
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`Leave to amend should be freely granted when justice so requires. See Fed. R.
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`Civ. P. 15(a). However, where an amendment would be futile, a district court may
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`dismiss a pleading without leave. Chubb Custom Ins. Co. v. Space Sys./Loral, Inc., 710
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`F.3d 946, 956 (9th Cir. 2013).
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`A motion for judgment on the pleadings may be brought “[a]fter the pleadings are
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`closed—but early enough not to delay trial[.]” Fed. R. Civ. P. 12(c). “Analysis under
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`Rule 12(c) is substantially identical to analysis under Rule 12(b)(6) because, under both
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`rules, a court must determine whether the facts alleged in the complaint, taken as true,
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`entitle plaintiff to a legal remedy.” Chavez v. United States, 683 F.3d 1102, 1108 (9th
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`Cir. 2012).
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`III. DISCUSSION
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` Plaintiffs allege Proposition 12 violates the dormant Commerce Clause. The
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`Commerce Clause authorizes Congress to “regulate commerce with foreign Nations, and
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`among the several States….” U.S. Const., art. I, § 8, cl. 3. “The Commerce Clause has
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`accordingly been interpreted by this Court not only as an authorization for congressional
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`action, but also, even in the absence of a conflicting federal statute, as a restriction on
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`permissible state regulation.” Hughes v. Oklahoma, 441 U.S. 322, 326 (1979). “This
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`limitation on state power has come to be known as the dormant Commerce Clause.”
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`Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1147 (9th Cir. 2012).
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`The Supreme Court has adopted a two tiered approach in determining whether a
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`law violates the dormant Commerce Clause. Brown-Forman Distillers Corp. v. N.Y.
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`State Liquor Auth., 476 U.S. 573, 578–79 (1986). First, a law that (1) “discriminate[s]
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`against interstate commerce” or (2) “directly regulate[es] extra-territorial conduct” is
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`“generally struck down without further inquiry.” Ass’n des Eleveurs de Canards et
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`d’Oies du Quebec v. Harris, 729 F.3d 937, 948–49 (9th Cir. 2013) (quoting Brown, 476
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`U.S. at 579). Second, a law that (3) “regulate[s] even-handedly to effectuate a legitimate
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`local public interest, and [where] its effects on interstate commerce are only incidental, []
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`will be upheld unless the burden imposed on such commerce is clearly excessive in
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`relation to the putative local benefit.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142
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`(1970). Thus, “[i]f a legitimate local purpose is found, the question becomes one of
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`degree.” Id. “[T]he extent of the burden that will be tolerated will of course depend on
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`the nature of the local interest involved and whether it could be promoted as well with a
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`lesser impact on interstate activities.” Id.
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`A. Extraterritorial Effect
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`Plaintiffs argue Proposition 12 violates the extraterritorial principle because it
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`regulates wholly out-of-state conduct. (Compl. 47:7–8.) Any “statute that directly
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`controls commerce occurring wholly outside the boundaries of a State exceeds the
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`inherent limits of the enacting State’s authority and is invalid regardless of whether the
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`statute’s extraterritorial reach was intended by the legislature.” Healy v. Beer Institute,
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`Inc., 491 U.S. 324, 336 (1989). However, “[a] statute is not invalid merely because it
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`affects in some way the flow of commerce between the states.” Eleveurs, 729 F.3d at
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`948–49. Even when a statute “has significant extraterritorial effects it passes Commerce
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`Clause muster when those effects result from the regulation of in-state conduct.”
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`Chinatown Neighborhood Ass’n v. Harris, 794 F.3d 1136, 1145 (9th Cir. 2015). “The
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`critical inquiry is whether the practical effect of the regulation is to control the conduct
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`beyond the boundaries of the State.” Healy, 491 U.S. at 336 (quoting Brown, 476 U.S. at
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`A statute that applies both to California entities and out-of-state entities does not
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`target wholly extraterritorial activity. See Eleveurs, 729 F.3d at 949. In Eleveurs, the
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`statute at issue “applie[d] both to California entities and out-of-state entities and
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`preclude[d] the sale within California of products produced by force feeding birds.” Id.
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`Because the statute precluded sales within California of products produced by force
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`feeding birds regardless of where the force feeding occurred, the statute did not directly
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`target out-of-state entities. See id. The court in Eleveurs reasoned that the economic
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`impact did not “depend on where the items were produced, but rather how they were
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`produced.” Id. at 948. In other words, the statute was not directed solely at out-of-state
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`producers because it applied to both in-state and out-of-state producers. See id. at 949.
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`Similarly here, Proposition 12 applies both to California entities and out-of-state
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`entities. (Compl. ¶ 292.) Proposition 12 precludes the sale within California of products
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`produced by hogs not raised in conformity with the requirements of Proposition 12,
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`regardless of where the hogs are raised. It therefore does not regulate wholly out-of-state
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`conduct. “[I]n-state and out-of-state” hog farmers “are burdened in exactly the same
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`way–all are effectively prevented from” raising hogs in violation of Proposition 12 if they
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`wish to sell their products to California. See Hass v. Oregon State Bar, 883 F.2d 1453,
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`1462 (9th Cir. 1989); see also Rocky Mountain Farmers Union v. Corey, 913 F.3d 940,
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`952 (9th Cir. 2019) (explaining that “subjecting both in and out-of-jurisdiction entities to
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`the same regulatory scheme to make sure that out-of-state jurisdiction entities are subject
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`to consistent [] standards is a traditional use of the State’s police power”).
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`Plaintiffs argue Proposition 12 reaches extraterritorially because it will “impose
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`California’s . . . housing requirements on other states and their producers” and “farms
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`developing some or all of their product primarily for sale outside California will likely be
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`required to meet Proposition 12” regulations. (See Compl. ¶¶ 31, 301.) However, such
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`arguments of disproportionate impact are ineffective in an extraterritorial effect analysis.
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`Even when a statute “has significant extraterritorial effects it passes Commerce Clause
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`muster when . . . those effects result from the regulation of in-state conduct.” Chinatown,
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`794 F.3d at 1145. Further, California may seek to influence which hog products are sold
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`in-state and create incentives for less harmful farming practices. See Rocky Mountain
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`Farmers Union, 913 F.3d at 952. Although Proposition 12’s regulations may
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`consequentially touch out of state farmers, “[t]he Commerce Clause . . . does not treat
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`regulations that have upstream effects on how sellers who sell to California buyers
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`produce their goods as being necessarily extraterritorial.” Id. (citing Minnesota v. Clover
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`Leaf Creamery Co., 449 U.S. 456, 472 (1981)).
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`Generally, a statute violates the extraterritorial principle when it is “directed at
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`interstate commerce and only interstate commerce.” See National Collegiate Athletic
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`Ass’n v. Miller, 10 F.3d 633, 638 (9th Cir. 1993). In NCAA, the statute only regulated
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`the NCAA—an inherently interstate organization. Id. In order to avoid liability under
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`the statute, the NCAA needed to apply Nevada’s procedures throughout the entire
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`country. Id. at 639. This type of extraterritorial effect is forbidden by the commerce
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`clause because it “could control the regulation of the integrity of a product in interstate
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`commerce that occurs wholly outside Nevada’s borders.” Id.
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`In contrast, Proposition 12 is not directed at interstate commerce and only
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`interstate commerce. See id. at 638. Unlike the Nevada statute, Proposition 12 does not
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`call for uniform procedures and practices throughout the entire country. Only those out-
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`of-state producers who sell directly to California need to follow the regulations that
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`Proposition 12 details. In addition, although a majority of production might take place
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`outside of California, California contains “approximately 8,000 sows” of which “1,500 of
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`those are in commercial production.” (Compl. ¶ 292.) Proposition 12 applies to these
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`California producers just the same as out-of-state producers.
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`Thus, Proposition 12 does not regulate extraterritorially because it does not target
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`solely interstate commerce and it regulates in-state and out-of-state conduct equally.
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`Although there are upstream effects on out-of-state producers, those effects are a result of
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`regulating in-state conduct. The motions challenging the sufficiency of Plaintiffs’
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`allegations supporting the unconstitutional regulation claim are accordingly GRANTED
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`and Plaintiffs’ first claim for relief is denied without prejudice. If Plaintiffs elect to file
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`an amended extraterritorial claim they will need to allege facts that demonstrate
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`Proposition 12 regulates conduct wholly outside of California.
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`B. Substantial Burden on Interstate Commerce
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`In their second claim for relief, Plaintiffs allege that Proposition 12 places
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`excessive burdens on interstate commerce. (Compl. ¶ 465.) The second tier of the
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`dormant Commerce Clause analysis focuses on statutes that “regulate[] even-handedly to
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`effectuate a legitimate local public interest.” Pike, 397 U.S. at 142. These laws “will be
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`upheld unless the burden imposed on such commerce is clearly excessive in relation to
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`the putative local benefit.” Id. “[U]nder Pike, a plaintiff must first show that the statute
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`imposes a substantial burden before the court will ‘determine whether the benefits of the
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`challenged laws are illusory.’” Eleveurs, 729 F.3d at 951–52 (quoting Optometrists, 682
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`F.3d at 1155).
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`“[M]ost statutes that impose a substantial burden on interstate commerce do so
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`because they are discriminatory” or attempt to regulate extraterritorially. See Eleveurs,
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`729 F.3d at 952. Plaintiffs do not raise a discriminatory argument, and as we concluded
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`above, their extraterritorial argument fails. However, the Ninth Circuit has found a small
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`number of cases violate the dormant Commerce Clause because they “generally result
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`from inconsistent regulation of activities that are inherently national or require a uniform
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`system of regulation.” Optometrists, 682 F.3d at 1148; Chinatown, 794 F.3d at 1146;
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`“Where [a] regulation does not regulate activities that inherently require a uniform
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`system of regulation and does not otherwise impair the free flow of materials and
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`products across state borders, there is not a significant burden on interstate commerce.”
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`Optometrists, 682 F.3d at 1154–55. In Optometrists, the plaintiffs challenged a
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`California law that “prohibited opticians and optical companies from offering
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`prescription eyewear at the same location in which eye examinations are provided.” Id.
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`at 1146. The plaintiffs wanted opticians to be able to offer similar one-stop shops as
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`optometrists and ophthalmologists could offer. Id. at 1151. They argued the law
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`imposed a significant burden because the restriction of one-stop shops resulted in a
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`transfer of market share income from out-of-state to in-state eyewear sellers. Id. at 1150.
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`However, the court found the plaintiffs failed to raise an argument regarding a burden on
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`interstate commerce because the plaintiffs did not produce evidence that the law
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`interfered with the flow of eyewear into California and the court concluded the activities
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`did not require a uniform system of regulation. Id. at 1155; see also NCAA, 10 F.3d at
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`639 (finding a Nevada statute unconstitutional because its extraterritorial reach created a
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`uniform system of application of enforcement proceedings.)
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`Plaintiffs make two arguments in support of their claim that Proposition 12
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`imposes a substantial burden on interstate commerce. First, Plaintiffs claim Proposition
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`Case 3:19-cv-02324-W-AHG Document 37 Filed 04/27/20 PageID.638 Page 11 of 12
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`12 substantially interferes with the interstate commerce of pork. (Compl. 56:6–7.)
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`Plaintiffs allege that if a cut of pork is sold in California, the entire pig must be raised in
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`accordance with Proposition 12 requirements. (Id. ¶ 346.) This means producers will be
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`required to conform to Proposition 12’s standards even for cuts of pork bound for other
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`states where there is no consumer demand for Proposition 12 pork. (Id. ¶ 347.)
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`However, while Proposition 12 might result in barriers to the production of pork, there
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`are no barriers to the flow of pork across state lines. See Optometrists, 682 F.3d at 1155.
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`Further, unlike the statute in NCAA, the fact that some Proposition 12 compliant pork
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`might reach states other than California does not mean Proposition 12 has the effect of
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`requiring a uniform system of regulation. While Proposition 12 will require “many
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`producers” to remodel their farms, (Compl. ¶ 231), Plaintiffs have not alleged that
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`Proposition 12 will require a uniform system of regulation.
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` Plaintiffs’ second argument in support of their claim that Proposition 12 imposes
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`a substantial burden on interstate commerce is that compliance with Proposition 12 will
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`result in substantial costs on out-of-state producers. (Compl. 51:3.) They allege
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`producers will incur direct costs from required renovations and indirect costs from new
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`and less efficient methods of animal husbandry. (Id. ¶¶ 310, 322.) “Supreme Court
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`precedent establishes that there is not a significant burden on interstate commerce merely
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`because a non-discriminatory regulation precludes a preferred, more profitable method of
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`operating.” Optometrists, 682 F.3d at 1154; see also Exxon Corp. v. Governor of
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`Maryland, 437 U.S. 117 (1978). This is because the Commerce Clause “protects the
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`interstate market, not particular interstate firms, from prohibitive or burdensome
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`regulations.” Exxon, 473 U.S. at 127–28. Although Proposition 12’s regulations may
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`burden pork producers and result in a less efficient mode of operation, there is no burden
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`on interstate commerce merely because it is less profitable than a preferred method of
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`operation.
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`In support of their argument that Proposition 12 will impose substantial costs on
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`producers, Plaintiffs claim the pork industry will consolidate into larger farms and
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`smaller farms will cease operations as a consequence of increased costs. (Compl. ¶ 341.)
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`However, “interstate commerce is not subjected to an impermissible burden simply
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`because an otherwise valid regulation causes some business to shift from one [] supplier
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`to another.” Exxon, 437 U.S. at 127. While pork producers and consumers might be
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`injured economically, “that argument relates to the wisdom of the statute, not its burden
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`on commerce.” See id. at 128. The fact that changes to the physical farms and
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`operations might impose financial burdens on the hog producers is not enough to
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`establish a substantial burden on interstate commerce.
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`Thus, Plaintiffs have failed to demonstrate that there is a substantial burden on
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`interstate commerce. As such, the Court need not determine whether the benefits of the
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`challenged law are illusory. The motions challenging the sufficiency of Plaintiffs’
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`substantial burden on interstate commerce claim for relief are GRANTED and the
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`second claim for relief is dismissed with leave to amend.
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`IV. CONCLUSION & ORDER
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`For the foregoing reasons, the court GRANTS Defendants’ motion to dismiss
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`[Doc. 18] and Defendant-Intervenors’ motion for judgment on the pleadings [Doc. 19]
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`with leave to amend.
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`Plaintiffs shall have 14 days to file an amended pleading, if any, to cure the defects
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`detailed above.
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`IT IS SO ORDERED.
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`Dated: April 27, 2020
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`States District Judge
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`12
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`19-cv-02324 W (AHG)
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`