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Supreme Court Upholds Dismissal of Prop 12 Suit

Updated: May 24, 2023


Picture of hog snout by Alex Lafayette via University of Arkansas
Picture of hog snout by Alex Lafayette via University of Arkansas

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The U.S. Supreme issued the much-anticipated decision in National Pork Producers Council v. Ross. The decision is focused on challenges to Prop 12, passed by California voters in 2018, which prohibits the in-state sales of products that are housed in a cruel manner. In a fractured opinion, the justices agreed to affirm the dismissal by the Ninth Circuit for failing to state a claim as a matter of law. This decision is in Natl. Pork Producers Council v. Ross.


Background


Prop 12, also known as the Prevention of Cruelty to Farm Animals Act, was passed by California voters in 2018. The proposition prohibits the sale of egg and meat products sold in California from animals confined in areas below the minimum square feet requirements established by the state. In addition, this law requires growers (whether in California or another state) to produce layers, veal, and pork confined in areas that meet the minimum square feet requirements. Because most of California's eggs, veal, and pork products are imported from out of state, NPPC and AFBF challenged the law claiming a violation of the dormant Commerce Clause.


This case began in 2019 as a challenge filed by the National Pork Producers Council and American Farm Bureau Federation, claiming that Prop 12 violated the dormant Commerce Clause, more on this in a minute. The federal district court dismissed the case on a failure to state a legal claim that relief could be granted. The Ninth Circuit affirmed this decision, and the two agricultural groups petitioned the U.S. Supreme Court for review, and the court granted that review.

Image of hogs in confined operation by United Soybean Board
Image of hogs in confined operation by United Soybean Board

Dormant Commerce Clause


The dormant Commerce Clause is also called the negative Commerce Clause. Article 1, Section 8, Clause 3 of the U.S. Constitution allows Congress to regulate commerce with foreign nations, among the several States, and with the Indian Tribes. To prevent states from passing legislation that would discriminate against out-of-state products or unduly burden out-of-state producers, courts created a doctrine that limits state legislatures from passing laws that could impact interstate commerce.


For example, if the General Assembly passed a law that required a minimum price for dairy products paid to Maryland dairies and at the same time included language that would not allow out-of-state suppliers to undercut the price with cheap dairy imports. This would be an example of a law that violates the dormant Commerce Clause. The state law unfairly discriminates against out-of-state milk producers in favor of those in Maryland.


Supreme Court Decision


Justice Gorsuch wrote the majority opinion for a 5-4 decision, but not all parts of Justice Gorsuch’s opinion gained a majority vote. The majority included Justices Thomas, Barrett, Sotomayer, Kagan, and Gorsuch. So let us focus on first what got a majority vote.

Image of hogs in confined operation by United Soybean Board
Image of hogs in confined operation by United Soybean Board

The next argument raised by NPPC and AFBF relates to a decision in Pike v. Bruce Church, Inc. Pike, a dormant Commerce Clause decision that develops a balancing test. With Pike and the decisions associated with it, the court balances the burden of the law against the benefits of the law. NPPC and AFBF argue the costs imposed on out-of-state pork producers and processors outweigh the benefits of Prop 12. Looking at these decisions, the court highlights that the decisive factor was the absence or presence of discrimination in practice. NPPC and AFBF did not argue discriminatory impact. Although the court agrees that past decisions did open a possibility of utilizing the Pike balancing test in nondiscriminatory burdens, the court does not consider applying Pike in this case. Based on these factors, the majority affirms the judgment of the Ninth Circuit to uphold the dismissal based on failure to state a legal claim upon which relief can be granted.


The court never reaches a majority on the issue of weighing animal welfare, a non-economic benefit, against the economic costs. Gorsuch highlights that Congress is better suited for that discussion than the courts in a section of the opinion only joined by Thomas and Barrett.


In another section of the opinion, only joined by Sotomayer and Kagen, Gorsuch points out that the Pike balancing test requires the NPPC and AFBF to plead facts to show a substantial burden on interstate commerce. To these three justices, the complaint fails based on the court's prior decision in Exxon Corp. v. Governor of Maryland. In that case, a Maryland law prohibited petroleum producers from operating retail gas stations in Maryland. According to Exxon, the problem with the law was that because there were no in-state petroleum producers, the law's impact fell on out-of-state producers. The court agreed with the state that the law did not impose a substantial burden on out-of-state producers. The Maryland state law did not limit competition from interstate retail gas station chains that did not produce petroleum or protect in-state producers. To the court, the Exxon decision highlights the problem vertically integrated companies face. They can divest the production practices that create issues in states or withdraw from those markets.


In the end, what would have changed the outcome of this decision? Looking at the concurrences and dissents, the change would have turned on better pleading the substantial burden on interstate commerce. In Roberts' dissent, Chief Justice Roberts, Justices Alito, Kavanaugh, and Jackson believe that the Ninth Circuit misapplied past decisions, and NPPC and AFBF did allege a substantial burden on interstate commerce. The dissent would remand to the Ninth Circuit to decide whether NPPC and AFBF stated a claim under Pike balancing. Although Justice Barrett agrees with large portions of Gorsuch’s opinion, she disagrees with the plurality’s view that the parties had not pleaded a substantial burden. Justices Sotomayer and Kagan’s decisions in this case also turn on pleading substantial burden better. This may not have changed the outcome, but it may require a different court analysis.

Image of piglets in hog operation by United Soybean Board
Image of piglets in hog operation by United Soybean Board

Why Care


As I said at the beginning, this is a fractured opinion, with only portions of Gorsuch’s opinion receiving five votes. At this time, California has been implementing Prop 12. By 2024, producers and distributors will need certifications that they are compiling with Prop 12.


This decision could open the door for additional animal welfare requirements to be put in place. The decision could also open the door for retaliatory restrictions being set by states impacted by Prop 12. For example, the affected states with pork production may put laws that impact traditional vegetable or fruit production from Florida. At this point, we will have to wait and see how things play out with this law.

References

Natl. Pork Producers Council v. Ross, 21-468, 2023 WL 3356528 (U.S. May 11, 2023).

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