Bioganic Safety Brands, Inc. v. Ament

• Decision Date: 20 November 2001
• Docket Number: No. 01-B-1808.,01-B-1808.
• Citation: 174 F.Supp.2d 1168
• Parties: BIOGANIC SAFETY BRANDS, INC., Plaintiff, v. Don AMENT, Colorado Commissioner of Agriculture, Defendant.
• Court: U.S. District Court — District of Colorado

174 F.Supp.2d 1168

BIOGANIC SAFETY BRANDS, INC., Plaintiff, v. Don AMENT, Colorado Commissioner of Agriculture, Defendant.

No. 01-B-1808.

United States District Court, D. Colorado.

November 20, 2001.

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M. Miller Baker, Richard B. Rogers, Michael S. Nadel, McDermott, Will and Emery, Washington, DC, Timothy O'Neil, Snell & Wilmer, LLP, Denver, CO, for Plaintiff.

David L. Joeris, Attorney General's Office, Denver, CO, for Defendant.

Memorandum Opinion and Order

BABCOCK, Chief Judge.

Plaintiff Bioganic Safety Brands, Inc. (Bioganic) seeks injunctive and declaratory relief based on the following claims: 1) Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) preemption; 2) 42 U.S.C. § 1983 Claim — First Amendment Violation; and 3) § 1983 — Dormant Commerce Clause Violation. I conclude that pursuant to Fed.R.Civ.P. 65(a)(2) consolidation of the preliminary injunction application with a trial on the merits for Claims One, Two and Three is appropriate. Trial was held on November 16, 2001. At that time, the only material issue of fact concerned irreparable injury. For the following reasons, I grant injunctive and declaratory relief on all claims.

I. Background

Bioganic manufactures the insect repellent products "ShooBug Cool Breeze" and "ShooBug Spice Islands" (collectively, ShooBug). Declaration of Edward Grindstaff (Grindstaff Decl.) ¶ 12.

Under 40 C.P.R. § 152.25(g), ShooBug is a pesticide product exempt from regulation under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. § 136 et seq. Grindstaff Decl. ¶ 3. As an exempt pesticide, ShooBug is subject, however, to FIFRA labeling requirements under 40 C.F.R. § 152.25(g)(3)(iii). Id.

Section 152.25(g)(3)(iii) of Title 40 of the Code of Federal Regulations provides that exempt pesticide product labels "must not include any false and misleading labeling statements, including those listed in 40 CFR 156.10(a)(5)(i) through (viii)." Subsection (ix) of § 156.10(a)(5) is omitted from the prohibited categories of labeling statements. Subsection ix refers to "Claims as to the safety of the pesticide or its ingredients, including statements such as `safe'...." 40 C.F.R. § 156.10(a)(5)(ix).

By Pesticide Registration Notice 2000-6, dated May 7, 2000, the United States Environmental Protection Agency (EPA) stated that true safety claims on labels of exempt pesticides are not "false and misleading" claims for purposes of 40 C.F.R. § 152.25(g)(3)(iii). Grindstaff Decl. Ex. 1, p. 6. According to Plaintiff, in accordance with the EPA's guidance, Bioganic includes a true claim on ShooBug's label that the product is "Safe for Kids." See Grindstaff Decl. Ex. 2 (ShooBug label).

On October 3, 2000, Bioganic sought to register ShooBug with the Colorado Department of Agriculture ("CODA") for the year January 1, 2001, to December 31, 2001. Grindstaff Decl. ¶ 5. At that time, Bioganic had arrangements to distribute ShooBug in Colorado on a limited basis through one national retail chain. Id. Under § 35-9-120, C.R.S. it is unlawful to distribute pesticide products within Colorado without prior registration of such products with CODA.

On November 24, 2000, the CODA informed Bioganic that its application for registration for ShooBug during 2001 was denied because, inter alia, ShooBug's safety claim on the label violated § 35-9-120(1)(g). See id. Ex. 3 (CODA notice of denial of ShooBug application).

Section 35-9-120(1)(g) provides, in pertinent part, that it is unlawful to make representations through "any media" as to "the safety of any pesticide or device." Rule 4.2(b) of the CODA Pesticide Act Rules and Regulations (CODA Pesticide Rules) provides that "[l]abels and labeling for pesticide products exempted from federal registration pursuant to 40 C.F.R. § 152.25(g) (1998) ... shall (1) comply with 40 C.F.R. § 152.25(g) (1998), as incorporated above; and (2) comply with the act and these rules." CODA Pesticide Rule 6.1(i) prohibits safety claims on pesticide labels.

At considerable expense and business inconvenience, Bioganic deleted the claim "Safe for Kids" from the label for those ShooBug products to be distributed by the national retailer within Colorado during 2001. Bioganic then submitted a revised application for registration with CODA on January 21, 2001. Grindstaff Decl. ¶ 7. On or about May 17, 2001, CODA approved the application for registration, based in part on Bioganic's removal of the claim "Safe for Kids" from the label of Colorado-bound ShooBug products. Id. at ¶ 8. To avoid violating § 35-9 — 120(1)(g), during 2001 Bioganic has refrained from making local advertising claims in Colorado that ShooBug is "Safe for Kids," thus impacting the effectiveness of its Colorado advertising. Id.

To distribute ShooBug in Colorado during 2002, Bioganic is required to re-register ShooBug with the CODA, as its current registration expires on December 31, 2001, pursuant to C.R.S. § 35-9-107(g)(4). Grindstaff Decl. ¶ 9. Bioganic believes CODA will grant Bioganic's renewal application only if ShooBug's label does not contain a "Safe for Kids" claim. Id.

Bioganic wishes and intends to sell ShooBug in Colorado and other states in 2002 on a far wider scale than in 2001 through several national retail chains, as opposed to one. Grindstaff Decl. ¶ 10. Bioganic is presently engaged in discussions with several potential customers about selling the ShooBug product in Colorado in 2002. Id. Bioganic also wishes and intends to advertise ShooBug in 2002 through a national advertising campaign that will include claims that ShooBug is "Safe for Kids." Id. at ¶ 11.

If Bioganic is forced to remove the claim "Safe for Kids" from its ShooBug label to distribute ShooBug in Colorado during 2002, Bioganic will incur considerable additional expense. Bioganic believes this would dissuade some, if not all, of Bioganic's potential national retailer customers from agreeing to market the product because of the burden of segregating Colorado-labeled ShooBug products from non-Colorado labeled ShooBug products in interstate distribution systems. Thus, according to Bioganic Colorado's regulation of the ShooBug label will thwart Bioganic's ability to fully market ShooBug in 2002. In addition, Bioganic contends that it is impossible to quantify the economic injury to Bioganic.

If Bioganic is disallowed from making the claim that ShooBug is "Safe for Kids" in any advertising within Colorado during 2002, Bioganic will be precluded from making the claim "Safe for Kids" in its planned national advertising campaign, most significantly by television, because the national advertising campaign will necessarily reach into Colorado. If Bioganic wishes to distribute and advertise ShooBug as "Safe for Kids" outside of Colorado in 2002 without any advertising "spillage" into Colorado, it will be necessary to undertake significantly more expensive inventory, distribution and market advertising campaigns inside and outside of Colorado, and the local market advertising in Colorado will be less effective because it will not include the "Safe for Kids" claim. Bioganic's marketing ability is adversely affected nationally and in Colorado. Moreover, differentiated advertising and labeling causes consumer confusion.

According to Bioganic, Colorado is the only state in the Union that prohibits it from making the claim that ShooBug is "Safe for Kids" on product labels and in advertising. Grindstaff Decl. ¶ 15. Bioganic claims that this prohibition violates the Dormant Commerce Clause and the First Amendment of the U.S. Constitution.

II. Law

Bioganic seeks to enjoin Defendant from enforcing § 35-9-120(1)(g) and CODA Pesticide Rules 4.2(b)(2) and 6.1(i). An injunction is an equitable remedy that invokes the sound discretion of the district court. Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir.1980). An injunction may issue if the movant clearly shows: (1) actual success on the merits; (2) irreparable injury if the injunction is not granted; (3) that injury outweighs any harm the injunction will cause the opposing party; and (4) the injunction is in the public interest. Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n. 12, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987); SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir.1991).

The nature of the injunction further increases the movants' burden. The following types of injunctions are disfavored and require the movant to satisfy an even heavier burden of showing that the four factors listed above weigh heavily and compellingly in movant's favor before such an injunction may be issued: (1) an injunction that disturbs the status quo; (2) an injunction that is mandatory as opposed to prohibitory; and (3) an injunction that affords the movant substantially all the relief he may recover at the conclusion of a full trial on the merits.... SCFC ILC, 936 F.2d at 1096-99. Here, Bioganic seeks a mandatory injunction. The movant must show that on balance, the four factors weight heavily and compelling in its favor. Id. I have applied this heightened standard in this case.

III. Claims

A. Claim OneFIFRA Preemption

1. Merits of Claim One based on Preemption

a. Preemption Law

State laws that conflict with federal law are invalid under the Supremacy Clause of the United States Constitution, Art. VI, cl. 2; Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 605, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991). When considering preemption, however, courts should "start with the assumption that the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [is] the clear and manifest purpose of Congress." Cipollone v. Liggett Group, 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). The "ultimate touchstone" of preemption analysis, therefore, is "the purpose of Congress." Cipollone at 516, 112 S.Ct. 2608.

Express preemption of state law exists where the...