On March 16, 2017, and June 6, 2017, we blogged about Missouri’s legal challenge to California’s egg rules. Now, there are two motions pending in the Supreme Court of the United States challenging the California law and a similar law in Massachusetts.
California requires its egg producers to provide substantially more space per egg-laying hen than is the industry standard. Obviously, that significantly raises the cost of producing any single egg. To protect its producers, California prohibits the sale of eggs from any other state that do not conform to the same space standards. Federal courts rejected Missouri’s pre-enforcement challenge on the ground that the State had sustained no concrete injury, and did not reach the merits.
In 2016, Massachusetts adopted a similar law via an initiative petition. The Massachusetts law applies to pigs and veal, in addition to eggs. Like California, it prohibits the sale in Massachusetts of eggs, pork or veal that does not comply with Massachusetts’ space requirements.
Earlier this month, Missouri joined twelve other states in seeking leave to sue California in an original action in the Supreme Court. Missouri attached to its proposed complaint a 41-page expert report analyzing the increased costs imposed by California’s regulations. According to the report, Missouri pays between $18,000 and $76,000 in additional costs to buy eggs for its correctional facilities. Nationwide, the report estimates that consumers will pay between $227 million and $911 million in additional costs. Thus, the Missouri complaint alleges both direct injury to the State in the form of higher prices it must pay for eggs and parens patriae injury to Missouri consumers.
The Missouri complaint alleges that the federal Egg Product Inspection Act (EPIA) preempts any state regulation of eggs that are “in addition to or different from” federal regulations issued under the EPIA. In 2012, in National Meat Association v. Harris, a unanimous Supreme Court held that identical language in the Federal Meat Inspection Act preempted California’s attempt to regulate slaughterhouses. Missouri also alleges that California’s egg rules violate the dormant commerce clause by effectively subjecting every State to its regulations.
The Indiana complaint alleges several kinds of injury. Through its public university Purdue, Indiana owns and operates farms that sell eggs, pork and veal. The additional cost of complying with the Massachusetts law will directly injure Indiana. States will also suffer direct injury in the form of higher prices for eggs. The Indiana complaint also alleges parens patriae injury both to Indiana farmers whose cost of production will rise and to Indiana consumers forced to pay higher prices. The legal theory of the complaint is that the Massachusetts law attempts to regulate the economic activity of farms throughout the country in violation of the dormant commerce clause.
The Supreme Court has original and exclusive jurisdiction over lawsuits between States. But it also has discretion to refuse to take such cases. The Court looks to two criteria to determine whether to exercise jurisdiction: how serious the plaintiff’s claim is and whether there is an existing alternative forum in which the claim may be resolved.
The Massachusetts brief in support of the complaint argues that there is a clear circuit split on application of the dormant commerce clause to non-price-related regulation of wholly out-of-state conduct. The Seventh and Eighth Circuits have held that such statutes are per se illegal. The Ninth and the Tenth Circuits have held that per se treatment is only appropriate for statutes that purport to regulate pricing in other states. That circuit split increases the likelihood that the Court will take the case.
If the Court takes the case, it will appoint a special master to hear evidence and issue recommendations about the proper disposition of the case. Both sides will then brief the issues and the Court will hear oral argument and rule on the merits.