November 7, 2014

Lawsuit Challenging California's New Egg Regulation Not All It Was Cracked Up To Be

Seller Beware: Consumer Protection Insights for Industry

The hopes of Missouri Attorney General Chris Koster were shattered last month when a federal court dismissed his lawsuit challenging a new California law regulating the production of eggs. On October 2, Judge Kimberly Mueller of the Eastern District of California dismissed the claims of six states challenging California's Proposition 2 (A.B. 1437), which requires that farmers who sell eggs in California provide their hens with room to stand up, lie down, and extend their wings, all of which are supposedly impossible in widely used conventional cages. The lawsuit (which we previously blogged about here) alleged that California's newly hatched egg requirements violated the Commerce Clause of the U.S. Constitution because of the impact they would have on farms outside California.

The judge dismissed the case on standing grounds, ruling that the states did not have standing under the parens patriae doctrine because each state was actually only representing the interests of the group of egg farmers within its state that had opted not to comply with the new law, rather than a significant portion of their citizenry. The court also rejected the states' argument that they had standing based on their own quasi-sovereign interests because the impact of California's law wouldn't sufficiently impact the citizens and economy of their states. Finally, the judge decided that the states had not presented a justiciable question for decision because there was no indication that out-of-state egg farmers planned to violate California's law or that California would enforce the criminal penalties for violating the law.

The court's reasoning in the case presents obstacles for states that may seek to challenge other California regulations that affect businesses within those states' boundaries. For example, California's Green Chemistry (Safer Consumer Products) regulations authorize wide-ranging restrictions on consumer products sold in California, regardless of where they are produced. The district court's opinion, while not binding on other courts, demonstrates that states wishing to challenge such regulations may have to do more than Missouri did in this case to establish standing and justiciability. States could potentially do so by establishing that the regulation they seek to challenge affects more than a small subset of its population or by demonstrating a negative economic impact of the regulations. In the meantime, California's pattern of setting de facto national standards for consumer products is likely to continue. 

Update: (12/10/2014): A more extensive discussion of this matter can be found on Law360.

© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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