Ass'n Des Éleveurs De Canards Et D'Oies Du Que. v. Bonta

• Decision Date: 06 May 2022
• Docket Number: 20-55882, No. 20-55944
• Citation: 33 F.4th 1107
• Parties: ASSOCIATION DES ÉLEVEURS DE CANARDS ET D'OIES DU QUÉBEC, a Canadian nonprofit corporation; HVFG, LLC, a New York limited liability company; Sean Chaney, an individual, Plaintiffs-Appellees/Cross-Appellants, v. Rob BONTA, in his official capacity as Attorney General of California, Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

33 F.4th 1107

ASSOCIATION DES ÉLEVEURS DE CANARDS ET D'OIES DU QUÉBEC, a Canadian nonprofit corporation; HVFG, LLC, a New York limited liability company; Sean Chaney, an individual, Plaintiffs-Appellees/Cross-Appellants,

v.Rob BONTA,^* in his official capacity as Attorney General of California, Defendant-Appellant/Cross-Appellee.

No. 20-55882

No. 20-55944

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 18, 2021 Pasadena, California

Filed May 6, 2022

Peter H. Chang (argued), Deputy Attorney General; Mark R. Beckington, Supervising Deputy Attorney General; Thomas S. Patterson, Senior Assistant Attorney General; Rob Bonta, Attorney General; Office of the Attorney General, San Francisco, California; for Defendant-Appellant/Cross-Appellee.

Michael Tenenbaum (argued), Office of Michael Tenenbaum, Santa Monica, California, for Plaintiffs-Appellees/Cross-Appellants.

Before: Andrew J. Kleinfeld, Ryan D. Nelson, and Lawrence VanDyke, Circuit Judges.

Opinion by Judge R. Nelson ;

Partial Concurrence and Partial Dissent by Judge VanDyke

OPINION

R. NELSON, Circuit Judge:

California prohibits the in-state sale of products that are "the result of force feeding a bird for the purpose of enlarging the bird's liver beyond normal size." Cal. Health & Safety Code § 25982. After nine years of litigation and in their third set of appeals before this Court, the parties ask us to decide whether California's sales ban is preempted by the Poultry Products Inspection Act ("PPIA") or violates the dormant Commerce Clause. If the ban is not preempted or unconstitutional, they ask us to clarify whether it permits certain internet, phone, and fax sales by out-of-state sellers. We hold that the sales ban is neither preempted nor unconstitutional and that the specified transactions are out-of-state sales permitted by California law.

I

In 2004, California passed a law targeting the practice of force feeding ducks or geese to produce foie gras. The law worked through two provisions. The first prohibited force feeding a bird "for the purpose of enlarging the bird's liver beyond normal size." Cal. Health & Safety Code § 25981. The second banned the in-state sale of products that are "the result of" that practice. Id. § 25982. The law provided a seven-and-a-half-year grace period for producers to transition away from force feeding before it went into effect. Id. § 25984.

At the end of the grace period, various foie gras sellers sued to enjoin enforcement of the sales ban provision. Since then, we have considered their arguments that the sales ban violates the Due Process Clause or is preempted by federal law under express, field, or obstacle preemption theories. See Ass'n des Eleveurs de Canards et d'Oies du Quebec v. Harris , 729 F.3d 937, 946–47 (9th Cir. 2013) (" Canards I "); Ass'n des Éleveurs de Canards et d'Oies du Québec v. Becerra , 870 F.3d 1140, 1145–53 (9th Cir. 2017) (" Canards II ") (rejecting prior express and implied preemption arguments following summary judgment). Following those decisions, the sellers returned to district court to add an impossibility preemption claim, a claim under the dormant Commerce Clause, and a claim for declaratory relief (clarifying that out-of-state sellers could sell foie gras to California buyers over the internet, phone, or fax). After further development of the record, they also sought to add an express ingredient preemption claim.

The district court denied leave to add the new express ingredient preemption claim and dismissed the impossibility preemption and dormant Commerce Clause claims.

Ass'n des Eleveurs de Canards et d'Oies du Quebec v. Harris , No. 2:12-CV-05735-SVW-RZ, 2020 WL 595440, at *6 (C.D. Cal. Jan. 14, 2020). But it granted summary judgment to the sellers on their declaratory judgment claim, construing the sales ban to allow online, phone, and fax sales to California buyers when title passes outside the state. Ass'n des Eleveurs de Canards et d'Oies du Quebec v. Harris , No. 2:12-CV-05735-SVW-RZ, 2020 WL 5049182, at *5 (C.D. Cal. July 14, 2020).

Both sides object to the district court's latest decisions. California's Attorney General appeals the declaratory judgment order, challenging the sellers' standing and arguing that the specified transactions are prohibited. For their part, the sellers cross-appeal the dismissal of their preemption and dormant Commerce Clause claims. They argue that it is impossible to comply with both California law and the PPIA and that the sales ban regulates extraterritorial conduct and unduly burdens interstate commerce. They also contend that they should have been allowed to add their express ingredient preemption claim.

II

We review de novo the district court's order granting a motion to dismiss for failure to state a claim, taking as true all allegations of material fact and construing them in the light most favorable to the nonmoving party. Cousins v. Lockyer , 568 F.3d 1063, 1067 (9th Cir. 2009). We review the district court's denial of leave to amend for abuse of discretion. Brown v. Stored Value Cards, Inc. , 953 F.3d 567, 573 (9th Cir. 2020).

We review de novo the district court's order granting summary judgment and "determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Dietrich v. John Ascuaga's Nugget , 548 F.3d 892, 896 (9th Cir. 2008) (citation omitted). The scope of a statute is a question of law, which we also review de novo. Canards I , 729 F.3d at 945 (quoting In re Lieberman , 245 F.3d 1090, 1091 (9th Cir. 2001) ).

"When interpreting state law, we are bound to follow the decisions of the state's highest court, and when the state supreme court has not spoken on an issue, we must determine what result the court would reach based on state appellate court opinions, statutes and treatises." Diaz v. Kubler Corp. , 785 F.3d 1326, 1329 (9th Cir. 2015) (quotation marks and brackets omitted).

III

We first discuss the sellers' cross-appeal, which raises two preemption questions. The first is whether the sales ban is preempted because it is impossible to comply with both the PPIA and California law. The second is whether the district court should have granted leave to amend because the record now shows that the sales ban forbids the sale of all foie gras and therefore imposes an "ingredient requirement" that is "in addition to, or different than" those under federal law and regulations. See 21 U.S.C. § 467e. Both questions turn on the sellers' assertion that it is physically impossible to produce foie gras without force feeding. We assume without deciding they are correct that the sales ban prohibits all foie gras sales in California.

Preemption is rooted in the "fundamental principle of the Constitution ... that Congress has the power to preempt state law." Crosby v. Nat'l Foreign Trade Council , 530 U.S. 363, 372, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000). It comes in three forms: express preemption, field preemption, and conflict preemption. Valle del Sol Inc. v. Whiting , 732 F.3d 1006, 1022 (9th Cir. 2013). Express preemption arises "when the text of a federal statute explicitly manifests Congress's intent to displace state law." Id. (citation omitted). Field and conflict preemption, on the other hand, are types of implied preemption. Field preemption prohibits state regulation of "conduct in a field that Congress, acting within its proper authority, has determined must be regulated by its exclusive governance." Id. (quoting Arizona v. United States , 567 U.S. 387, 399, 132 S.Ct. 2492, 183 L.Ed.2d 351 (2012) ). And even where Congress has not occupied the field, conflict preemption arises when state law conflicts with a federal statute. Id. at 1023 (quoting Crosby , 530 U.S. at 372, 120 S.Ct. 2288 ). Impossibility preemption—a form of conflict preemption—occurs when "it is impossible for a private party to comply with both state and federal law." Id. (quoting Crosby , 530 U.S. at 372, 120 S.Ct. 2288 ).

A

The sellers first argue that the sales ban is preempted because it is impossible to comply with both California law and the PPIA. In their view, they cannot comply with the sales ban if federal law requires foie gras to be produced via force feeding. They contend that the sales ban is a mandate that foie gras not include force-fed products and therefore their only option is to withdraw from the market. They then point to the Supreme Court's decision in Mutual Pharmaceutical Co. v. Bartlett , 570 U.S. 472, 133 S.Ct. 2466, 186 L.Ed.2d 607 (2013), to argue that a state law is preempted if it requires producers to stop selling their products.

The PPIA is a federal law that protects consumers by ensuring that "poultry products ... are wholesome, not adulterated, and properly marked, labeled, and packaged." 21 U.S.C. § 451. It authorizes the Secretary of Agriculture to prescribe "definitions and standards of identity or composition [f]or articles" within its scope. Id. § 457(b).¹ According to the sellers, those "definitions and standards" require foie gras to be produced by force feeding because the USDA defines foie gras as liver from poultry that has been "specially fed and fattened." They do not find that definition in the text of the PPIA or in a regulation, adopted by notice and comment, with the force of law. But at least one USDA Policy Book, expressly adopted as guidance, defines foie gras as "liver ... obtained exclusively from specially fed and fattened geese and ducks," and other USDA documents support the proposition that a "specially fed and fattened" bird is one that has been force fed.

Unfortunately for the sellers, the definition of foie gras is beside the point: it is not impossible to produce foie gras in accordance with a USDA Policy Book just because force-fed products cannot be sold in California. Even assuming the USDA guidance requires force feeding, the...