N.Y. Statewide Coal. Commerce v.

• Decision Date: 26 June 2014
• Citation: 2014 N.Y. Slip Op. 04804,23 N.Y.3d 681,992 N.Y.S.2d 480,16 N.E.3d 538
• Parties: In the Matter of NEW YORK STATEWIDE COALITION OF HISPANIC CHAMBERS OF COMMERCE, et al., Respondents, v. The NEW YORK CITY DEPARTMENT OF HEALTH AND MENTAL HYGIENE, et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

23 N.Y.3d 681

16 N.E.3d 538

992 N.Y.S.2d 480

2014 N.Y. Slip Op. 04804

In the Matter of NEW YORK STATEWIDE COALITION OF HISPANIC CHAMBERS OF COMMERCE, et al., Respondents,

v.The NEW YORK CITY DEPARTMENT OF HEALTH AND MENTAL HYGIENE, et al., Appellants.

Court of Appeals of New York.

June 26, 2014.

Michael A. Cardozo, Corporation Counsel, New York City (Richard Dearing, Fay Ng, Leonard J. Koerner, Pamela Seider Dolgow, Mark Muschenheim, Jasmine M. Georges, Spencer Fisher, Zachary W. Carter and Trevor D. Lippman of counsel), for appellants.

Latham & Watkins LLP (Richard P. Bress, of the District of Columbia bar, admitted pro hac vice, William K. Rawson, of the District of Columbia bar, admitted pro hac vice, Lori Alvino McGill, Michael E. Bern, of the District of Columbia bar, admitted pro hac vice, Kala Sherman–Presser, of the District of Columbia bar, admitted pro hac vice, and Andrew D. Prins of counsel), Latham & Watkins, LLP, New York City (James E. Brandt of counsel), for The American Beverage Association, Weil, Gotshal & Manges, LLP, New York City (James W. Quinn, Salvatore A. Romanello and Gregory Silbert of counsel), for The National Restaurant Association, MoloLamken LLP (Steven F. Molo and Ben Quarmby of counsel), for The New York Statewide Coalition of Hispanic Chambers of Commerce and another, Rivkin Radler, LLP, Uniondale (Evan H. Krinick, Barry I. Levy and Brian L. Bank of counsel), for Soft Drink and Brewery Workers Union, Local 812, International Brotherhood of Teamsters, and Matthew N. Greller, Esq., LLC, Millburn, New Jersey (Matthew N. Greller of counsel), for The National Association of Theatre Owners of New York State, respondents.

Andrew Goldberg, New York City, for Wilfredo Lopez and another, amici curiae.

Columbia Law School, Center for Constitutional Governance, New York City (Gillian E. Metzger, Richard Briffault and Sara Haviva Mark of counsel), for Gillian E. Metzger and others, amici curiae.

Bromberg Law Office, P.C., New York City (Brian L. Bromberg of counsel), ChangeLab Solutions, Oakland, California (Anne Pearson, Manel Kappagoda, Lindsey Zwicker and Amy Barsky of counsel), and Ohio State University College of Public Health & Moritz College of Law, Columbus, Ohio (Micah Berman of counsel), for National Association of County and City Health Officials and others, amici curiae.

Featherstonhaugh, Wiley & Clyne, LLP, Albany (James D. Featherstonhaugh of counsel), for The Business Council of New York State, Inc. and others, amici curiae.

Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, Washington, D.C. (Sarah R. Prins, Roy T. Englert, Jr., and Alex Potapov of counsel), and Washington Legal Foundation (Cory L. Andrews and Richard A. Samp of counsel), for Washington Legal Foundation and another, amici curiae.

Watkins Bradley LLP, New York City (Adam Francois Watkins and

Stephanie F. Bradley of counsel), for Maria Del Carmen Arroyo and others, amici curiae.

King & Spalding LLP, New York City (David M. Fine of counsel), and King & Spalding LLP, Atlanta, Georgia (Jeffrey S. Cashdan and Merritt E. McAlister of counsel), for New York State Conference of the National Association for the Advancement of Colored People and others, amici curiae.

Shapiro, Arato & Isserles LLP, New York City (Alexandra A.E. Shapiro, Marc E. Isserles and Chetan A. Patil of counsel), for The Chamber of Commerce of the United States of America and others, amici curiae.

Reese Richman LLP, New York City (Kim E. Richman of counsel), for Paul A. Diller and others, amici curiae.

Whatley Kallas, LLP, New York City (Patrick J. Sheehan of counsel), and Public Good Law Center, Berkeley, California (Seth E. Mermin and Julia Z. Marks of counsel), for National Alliance for Hispanic Health and others, amici curiae.

Jones Day, Washington, D.C. (Anthony J. Dick, Noel J. Francisco, Ryan D. Newman, William D. Coglianese, Sarah A. Hunger and Matthew R. McGuire of counsel), for Eric Lane, amici curiae.

OPINION OF THE COURT

PIGOTT, J.

We hold that the New York City Board of Health, in adopting the “Sugary Drinks Portion Cap Rule”, exceeded the scope of its regulatory authority. By choosing among competing policy goals, without any legislative delegation or guidance, the Board engaged in law-making and thus infringed upon the legislative jurisdiction of the City Council of New York.

I.

The New York City Board of Health is part of the City's Department of Health and Mental Hygiene and consists of the Commissioner of that Department, the Chairperson of the Department's Mental Hygiene Advisory Board, and nine other members, appointed by the Mayor. In June 2012, as part of its effort to combat obesity among City residents, the Department proposed that the Board amend Article 81 of the City Health Code so as to restrict the size of cups and containers used by food service establishments for the provision of sugary beverages. After a preliminary vote by the Board, a Notice of Public Hearing was published, seeking comments from the public. The substantial number of comments both before and during the July hearing indicated a groundswell of public interest and concern. On September 13, 2012, the Board voted, with one abstention, to adopt the Department's proposed rule—referred to as the “Portion Cap Rule”—to go into effect in March 2013.

The Portion Cap Rule provides in relevant part that “[a] food service establishment may not sell, offer, or provide a sugary drink in a cup or container that is able to contain more than 16 fluid ounces” and “may not sell, offer or provide to any customer a self-service cup or container that is able to contain more than 16 fluid ounces” (N.Y. City Health Code [24 RCNY] § 81.53[b], [c] ). A “sugary drink” is defined as a non-alcoholic beverage that “is sweetened by the manufacturer or establishment with sugar or another calorie sweetener; ... has greater than 25 calories per 8 fluid ounces of beverage; ... [and] does not contain more than 50 percent of milk or milk substitute by volume as an ingredient” (N.Y. City Health Code [24 RCNY] § 81.53[a][1] ). The Portion Cap Rule does not apply to establishments, such as supermarkets and conveniencestores, that are subject to regulation and inspection by the New York State Department of Agriculture and Markets.

II.

In October 2012, petitioners, six national or statewide not-for-profit and labor organizations, commenced this hybrid article 78 proceeding and declaratory judgment action seeking to invalidate the Portion Cap Rule. In addition to the Board of Health, the Department of Health and Mental Hygiene and its Commissioner are named as respondents.

On March 11, 2013, Supreme Court, New York County granted the petition, declared the Portion Cap Rule invalid, and permanently enjoined respondents from implementing or enforcing it. Supreme Court addressed two arguments raised by petitioners—first, whether the Board of Health had exceeded its regulatory authority “and impermissibly trespassed on legislative jurisdiction” (2013 N.Y. Slip Op. 30609[U], *11, 2013 WL 1343607 [Sup.Ct., N.Y. County 2013] ) and second, whether the Portion Cap Rule is “arbitrary and capricious” ( id. at *35). The court ruled in favor of petitioners on both contentions.

With respect to the first issue, the court surveyed the history of the New York City Charter and reached the conclusion that the elective New York City Council is the sole legislative body in the City, rejecting respondents' contention that the Board of Health has inherent law-making authority. Supreme Court applied our decision in Boreali v. Axelrod, 71 N.Y.2d 1, 523 N.Y.S.2d 464, 517 N.E.2d 1350 (1987), in which we held that the New York State Public Health Council overstepped its regulatory authority when it adopted regulations prohibiting smoking in a wide variety of indoor areas open to the public that had previously been considered, but not adopted, by the State Legislature. Supreme Court addressed the four considerations that we had identified in Boreali, and concluded that each of those factors weighed in favor of invalidating the Portion Cap Rule ( see 2013 N.Y. Slip Op. 30609[U] at *11–34). Finally, Supreme Court found the Portion Cap Rule arbitrary and capricious, noting that “it applies to some but not all food establishments in the City, [and] it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories” (2013 N.Y. Slip Op. 30609[U] at *35).

The Appellate Division unanimously affirmed Supreme Court's order, also rejecting the contention that the Board has inherent legislative power, and holding that “under the principles set forth in Boreali, the Board of Health overstepped the boundaries of its lawfully delegated authority when it promulgated the Portion Cap Rule to curtail the consumption of soda drinks. It therefore violated the state principle of separation of powers” (110 A.D.3d 1, 16, 970 N.Y.S.2d 200 [1st Dept.2013] ). The Appellate Division did not reach the issue of whether the Portion Cap Rule is arbitrary and capricious.

With respect to the first Boreali factor, relating to whether the agency engaged in the balancing of competing concerns of public health and economic cost, thus acting on its own idea of sound public policy, the Appellate Division reasoned that the Board did not act solely with a view toward public health considerations but engaged in policy-making when it adopted the Portion Cap Rule. The court observed that the Portion Cap Rule is “especially suited for legislative determination as it involves ‘difficult social problems,’ which must be resolved by ‘making choices among competing ends' ” (110 A.D.3d at 11, 970 N.Y.S.2d 200, quoting Boreali, 71 N.Y.2d at 13, 523 N.Y.S.2d 464, 517 N.E.2d 1350).

With regard to the second Boreali factor, whether the agency created its own comprehensive set of rules without benefit of legislative guidance, the Appellate Division concluded that the Board illicitly created the Portion Cap Rule on a ...