National Ass'n of Optometrists & Opt. v. Brown

• Decision Date: 28 May 2009
• Docket Number: No. 07-15050.,07-15050.
• Citation: 567 F.3d 521
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: NATIONAL ASSOCIATION OF OPTOMETRISTS & OPTICIANS LENSCRAFTERS, INC.; Eye Care Centers of America, Inc., Plaintiffs-Appellees, v. Edmund G. BROWN, in his official capacity as Attorney General of the State of California, Defendant-Appellant, and Charlene Zettel, Director, Department of Consumer Affairs, Defendant.

567 F.3d 521

NATIONAL ASSOCIATION OF OPTOMETRISTS & OPTICIANS LENSCRAFTERS, INC.; Eye Care Centers of America, Inc., Plaintiffs-Appellees, v. Edmund G. BROWN, in his official capacity as Attorney General of the State of California, Defendant-Appellant, and Charlene Zettel, Director, Department of Consumer Affairs, Defendant.

No. 07-15050.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 16, 2008.

Filed May 28, 2009.

Jennifer L. Weck, Deputy Attorney General, San Diego, CA, for the appellant.

Lori A. Schechter, Morrison & Foerster, LLP, San Francisco, CA, for the appellees.

Appeal from the United States District Court for the Eastern District of California, Lawrence K. Karlton, District Judge, Presiding. D.C. No. CV-02-01464-LKK.

Before: PROCTER HUG, JR., RICHARD A. PAEZ, and MARSHA S. BERZON, Circuit Judges.

HUG, Circuit Judge:

In this case we consider whether portions of certain California statutes and regulations violate the dormant Commerce Clause. The challenged laws prevent licensed opticians¹ from having specified business relationships with or offering services in the same locations as licensed optometrists and ophthalmologists.

The National Association of Optometrists and Opticians, LensCrafters, Inc., and Eye Care Centers of America, Inc. challenged a portion of the California statutes and regulations as violating the dormant Commerce Clause and moved for summary judgment. California's Attorney General and Department of Consumer Affairs (collectively "the State") opposed the motion. The district court granted summary judgment for the plaintiffs and entered the following declaratory judgment and injunction:

It is hereby DECLARED that California Business & Professions Code, §§ 655, 2556 and 3103, and two companion regulations, 16 Cal.Code of Regs., Title 16 §§ 1399.251 and 1514, are unconstitutional as they violate the dormant aspect of the Commerce Clause of the United States Constitution, to the extent that individually, or taken together, they prohibit optical companies from offering prescription eyewear at the same location in which eye examinations are provided, and from advertising that eyewear and eye examinations are available in the same location.

Defendants are hereby permanently ENJOINED and PROHIBITED from enforcing California Business & Professions Code, §§ 655, 2556 and 3103, and two companion regulations, 16 Cal.Code of Regs., Title 16 §§ 1399.251 and 1514, either individually, or taken together, so as to prohibit optical companies from offering prescription eyewear at the same location in which eye examinations are provided, and from advertising that eyewear and eye examinations are available in the same location.

The defendants timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse and remand for further proceedings.

I. Standing

As a preliminary matter, the State challenges the standing of two of the appellees, Eye Care Centers of America and the National Association of Optometrists and Opticians. It does not, however, challenge LensCrafters' standing. As a general rule, in an injunctive case this court need not address standing of each plaintiff if it concludes that one plaintiff has standing. See Preminger v. Peake, 552 F.3d 757, 764 (9th Cir.2008). Because LensCrafters unquestionably has standing, we must reach the question of whether the California laws violate the dormant Commerce Clause. Thus, we do not address the challenge to the other appellees' standing and refer to appellees collectively as LensCrafters.

II. Dormant Commerce Clause

The Commerce Clause as written is an affirmative grant of power to Congress to regulate interstate commerce, but from it courts have long inferred a prohibition on state actions limiting interstate commerce. South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87, 104 S.Ct. 2237, 81 L.Ed.2d 71 (1984). This inference, commonly referred to as the dormant Commerce Clause, promotes a national market and the free flow of commerce between the states by preventing them from adopting economic protectionist policies. See Gen. Motors Corp. v. Tracy, 519 U.S. 278, 299-300, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997); C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 390, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994).

Under the dormant Commerce Clause, LensCrafters seeks declaratory and injunctive relief, arguing that portions of the California statutes and regulations are protectionist measures because they favor in-state optometrists and ophthalmologists at the expense of opticians and optical companies head-quartered out of state. The State responds that the California laws do not violate the dormant Commerce Clause because they are not impermissible economic protectionism; instead, these laws prevent optometrists and ophthalmologists, as health care providers, from being unduly influenced by commercial interests, like LensCrafters.

The relevant statutes provide that licensed optometrists and opticians cannot "have any membership, proprietary interest, coownership, landlord-tenant relationship, or any profitsharing arrangement in any form, directly or indirectly" with each other. Cal. Bus. & Prof.Code § 655(a)-(b). They further provide that it is unlawful for an optician to advertise or furnish the services of an optometrist or ophthalmologist, employ an optometrist or ophthalmologist, maintain an optometrist or ophthalmologist on or near the optician's premises, or duplicate or change lenses without a prescription from an optometrist or an ophthalmologist. Id. § 2556. An optician cannot include in any advertisement relating to the sale of eyewear words that indicate the practice of optometry, id. § 3103, and it is unprofessional conduct for an optician to advertise the services of an optometrist or ophthalmologist. Cal. Admin. Code § 1399.251. If an optometrist rents space from a commercial concern, the rented space must be definite and apart from space occupied by other occupants of the premises, and the optometrist's name or practice cannot be linked in advertising or in any other manner with that of the commercial concern. Id. § 1514.

Although the language of the statutes and regulations forbids several types of conduct, the district court noted that LensCrafters only challenged the prohibition on co-location and advertising of optometric services:

Plaintiffs challenge three sections of California's Business & Professions Code, §§ 655, 2556 and [3103], and two companion regulations, 16 Cal.Code of Regs, Title 16 §§ 1399.251 and 1514, to the extent these provisions taken together prohibit out-of-state optical companies from offering prescription eyewear at the same location in which eye examinations are provided, and from advertising that eyewear and eye examinations are available in the same location.

Nat'l Ass'n of Optometrists & Opticians v. Lockyer, 463 F.Supp.2d 1116, 1118 (E.D.Cal.2008). LensCrafters challenges the California laws primarily because optometrists and ophthalmologists can set up a practice where patients can get an eye examination and also buy prescription eyewear. Opticians are unable to offer this convenience, which LensCrafters describes as "one-stop shopping."

LensCrafters contends one-stop shopping provides a significant business advantage in the sale of eyewear. It also asserts that opticians are largely out-of-state businesses, whereas optometrists and ophthalmologists are largely in-state individuals or firms. Thus, LensCrafters argues the California laws have a discriminatory effect on out-of-state businesses because they prevent out-of-state opticians from offering one-stop shopping while allowing in-state optometrists and ophthalmologists to do so.

To address LensCrafters' claim, we must first determine whether the dormant Commerce Clause is applicable to this case. The dormant Commerce Clause is implicated if state laws regulate an activity that "has a substantial effect' on interstate commerce such that Congress could regulate the activity." Conservation Force, Inc. v. Manning, 301 F.3d 985, 993 (9th Cir.2002). We conclude that the dormant Commerce Clause is applicable to this case because the retail sale of eyewear involves and affects interstate commerce such that Congress could regulate in that area. See generally LensCrafters, Inc. v. Robinson, 403 F.3d 798, 802 (6th Cir.2005). Neither party challenges this premise.

Once the dormant Commerce Clause applies, the next step is to determine whether the challenged California laws discriminate against out-of-state entities. C & A Carbone, 511 U.S. at 391, 114 S.Ct. 1677; Conservation Force, Inc., 301 F.3d at 995. Laws that discriminate against out-of-state entities are subject to strict scrutiny, while non-discriminatory laws only need to satisfy a less rigorous balancing test to survive constitutional scrutiny. C & A Carbone, Inc., 511 U.S. at 390, 392, 114 S.Ct. 1677; Conservation Force, Inc., 301 F.3d at 995.

A statutory scheme "can discriminate against out-of-state interests in three different ways: (a) facially, (b) purposefully, or (c) in practical effect." LensCrafters, 403 F.3d at 802 (internal quotation omitted). In this case both parties agree that the California laws do not facially discriminate against out-of-state entities, so we are left to consider whether the portion of the challenged laws have a discriminatory purpose or effect.

The district court discussed evidence of discriminatory purpose in this case, but it did not rely on the laws' purpose in concluding that they are discriminatory. See Nat'l Ass'n of Optometrists & Opticians, 463 F.Supp.2d at 1130. The district court stated:

[T]he evidence shows that Section 655, arguably the key provision being challenged, was introduced in the California Legislature, as the Act's chief sponsor put it, "on behalf of the California Optometric Association in an effort to protect California from some of the problems . . . being...