Hong Kong Supermarket v. Kizer

• Decision Date: 22 October 1987
• Docket Number: No. 86-6289,86-6289
• Parties: HONG KONG SUPERMARKET, Plaintiff-Appellant, v. Kenneth KIZER; Jack Metz; Helen Gerig; State of California; the Secretary of Agriculture of the United States of America, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1078

830 F.2d 1078

HONG KONG SUPERMARKET, Plaintiff-Appellant, v. Kenneth KIZER; Jack Metz; Helen Gerig; State of California; the Secretary of Agriculture of the United States of America, Defendants-Appellees.

No. 86-6289.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 2, 1987.

Decided Oct. 22, 1987.

Fred M. Blum, Los Angeles, Cal., for plaintiff-appellant.

Dianne Bardsley and Brian C. Kipnis, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before ALARCON, NELSON and O'SCANNLAIN, Circuit Judges.

NELSON, Circuit Judge:

Hong Kong Supermarket ("Hong Kong") brought suit against the Secretary of Agriculture ("Secretary"), the State of California ("State"), and certain state agency personnel, to enjoin the allegedly discriminatory The district court dismissed Hong Kong's complaint for lack of standing. We note jurisdiction under 28 U.S.C. Sec. 1291 and affirm.

administration of the Special Food Program for Women, Infants and Children ("WIC"), 42 U.S.C. Secs. 1786-1789 (1982 & West Supp. 1987). Hong Kong claims that the high incidence of lactose intolerance and malabsorption among Southeast Asians prevents their use of WIC milk-product coupons, effectively reducing their meaningful access to the WIC program. Hong Kong contends that the alleged failure of the Secretary and State to adjust the selection of eligible food products to cultural differences among races violates its clientele's right to equal protection.

FACTUAL AND PROCEDURAL BACKGROUND

The WIC program was enacted by Congress in order to provide free supplemental foods to meet the specific nutritional needs of pregnant, postpartum, and breastfeeding women, and infants and children of low-income families determined to be "at nutritional risk." 42 U.S.C. Sec. 1786(a), (c)(1), (d)(1). The program is designed to supplement the food stamp program, and to provide nutrition education to prevent health problems and improve the health of its participants during critical periods of growth and development. Id. Sec. 1786(a), (c)(1), (e). WIC authorizes the Secretary to administer the program. Id. Sec. 1786(c). The Secretary implements the program by awarding federal grants-in-aid to state agencies. Id. Sec. 1786(f)(1). Only those foods that the Secretary prescribes may be distributed by the participating state agencies. Id. Sec. 1786(b)(14); see also 7 C.F.R. Sec. 246.10 (1987) (listing prescribed foods and recommended food packages including milk, cheese, eggs, cereals, fruit juices, and legumes). The statute, however, permits state agencies to submit proposals to substitute different, nutritionally equivalent foods in order to allow for varying cultural eating patterns, subject to the approval of the Secretary. 42 U.S.C. Sec. 1786(b)(14); 7 C.F.R. Sec. 246.10(e).

California currently operates a federally approved WIC program, governed by the California Health & Safety Code Secs. 311-319 (West Supp. 1987). Under the state program, eligible recipients receive "nutrition coupons," with a specific type and quantity of food product printed on the face of each coupon. Cal. Health & Safety Code Secs. 311.5(d), 312.5. The California Department of Health Services enters into contracts with retail food vendors who are then authorized to exchange the WIC coupons only for the specified food products, and to redeem the coupons it receives from customers for cash from the state administrators of the WIC program. Id. Secs. 314, 314.5. The vendors are subject to audits and investigations to monitor their compliance with the WIC program and to sanctions for violating the statutory rules. Id. Secs. 316-318.

Hong Kong, an authorized vendor under the WIC program, is a retail supermarket in the Chinatown area of Los Angeles that caters primarily to a Southeast Asian clientele. Between May 1982 and April 1983, Hong Kong redeemed WIC coupons for a total sum of $1,034,984. On December 19, 1983, the State notified Hong Kong that, pursuant to an audit, Hong Kong had to reimburse the State in the amount of $909,671 for improperly redeeming WIC coupons for items other than those specified on the face of the coupons. Hong Kong requested an administrative hearing, which was held on June 12, 1985. Hong Kong's complaint indicates that an administrative law judge submitted a proposed decision finding that the state WIC program regulations governing vendor hearings were not promulgated in accordance with the federal regulations or relevant California law. The complaint does not indicate what conclusion, if any, was reached regarding Hong Kong's liability for the monetary penalty. The proposed decision is not final, and is awaiting review by the Director of the Department of Health Services of California, pending the outcome of the present lawsuit.

Hong Kong initially filed suit in state court against the state defendants on June Hong Kong requests a judicial declaration of the discriminatory impact of the regulations and an injunction prohibiting state personnel from administering the WIC program--i.e., precluding the issuance of any WIC coupons and the expenditure of any state funds on the WIC program or on vendor hearings, especially its own pending administrative appeal--until the regulations are amended to assure the constitutional implementation of the program. The federal and state defendants filed motions seeking dismissal of the action for lack of standing, or alternatively for summary judgment.

11, 1985, one day prior to the administrative hearing. Hong Kong's request for injunctive relief against the allegedly discriminatory administration of the WIC program was denied. The State removed the action to district court, where the court ordered Hong Kong to amend its complaint to join the Secretary pursuant to Fed.R.Civ.P. 19. Hong Kong accordingly filed a first amended complaint alleging that the federal regulations and state administration of the WIC program invidiously discriminated against Southeast Asians and Indochinese refugees by basing the selection of supplemental foods on a conventional American diet, without taking into account the diverse cultural eating habits and lactose intolerance of these groups. Therefore, Hong Kong does not challenge the WIC statute on its face, but rather challenges its allegedly discriminatory implementation.

On July 15, 1986, the district court dismissed Hong Kong's complaint for lack of standing. The court found that Hong Kong lacked standing under article III of the United States Constitution and also lacked prudential standing, having failed to demonstrate that it is "a suitable champion of the nutritional needs of the Southeast Asians it seeks to represent." Hong Kong filed a timely appeal.

ISSUE PRESENTED

Whether Hong Kong lacks standing to assert the claims of its WIC program customers.

STANDARD OF REVIEW

The question whether a party lacks standing is a legal issue subject to de novo review. Bruce v. United States, 759 F.2d 755, 758 (9th Cir.1985). In addition, in ruling on a Fed.R.Civ.P. 12(b)(6) motion to dismiss for want of standing, "both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975); accord Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.), cert. denied, 454 U.S. 1031, 102 S.Ct. 567, 70 L.Ed.2d 474 (1981). ¹ We cannot, however, interpret the complaint

"so liberally as to extend our jurisdiction beyond its constitutional limits." Western Mining Council, 643 F.2d at 624.

DISCUSSION

The determination whether a plaintiff has standing involves both constitutional and prudential limitations. McMichael v. County of Napa, 709 F.2d 1268, 1269 (9th Cir.1983). The constitutional limitations of article III contain three components: (1) a threatened or actual distinct and palpable injury to the plaintiff; (2) a fairly traceable causal connection between the alleged injury and the defendant's challenged conduct; and (3) a substantial likelihood that the requested relief will redress or prevent the injury. Id. at 1270.

The prudential limitations require the plaintiff to (1) assert his own rights, rather than rely on the rights or interests of third parties; (2) allege an injury that is more than a generalized grievance; and (3) allege an interest that is arguably within the zone of interests protected or regulated by the statute or constitutional guarantee in question. Id. Failure to satisfy any of these constitutional or prudential requirements defeats standing. Fors v. Lehman, 741 F.2d 1130, 1132 (9th Cir.1984).

The district court found that Hong Kong lacked both article III and prudential standing. In view of the basic policy of federal courts against unnecessary determination of constitutional issues, we should avoid the article III question when standing can be decided on the basis of one of the prudential limitations. McMichael, 709 F.2d at 1271. Because we conclude that Hong Kong lacks standing under the first prudential limitation, we need not address the article III question. See id. at 1271-73 (affirming district court's dismissal of action for lack of standing solely on the basis of plaintiff's failure to satisfy the zone-of-interests prudential consideration); see also Fors, 741 F.2d at 1134 (same).

Prudential limitations require that parties assert their own rights rather than rely on the rights or interests of third parties. McMichael, 709 F.2d at 1270. Federal courts have traditionally been reluctant to grant third-party standing. Darring v. Kincheloe, 783 F.2d 874, 877 (9th Cir.1986). Although certain exceptions to the rule against third-party standing have been recognized in cases involving vendors (e.g., Craig v. Boren, 429 U.S. 190, 193-95, 97 S.Ct. 451, 454-55, 50 L.Ed.2d 397 (1976) (vendor...