Syngenta Corp Protection, Inc. v. Helliker

• Decision Date: 25 April 2006
• Docket Number: No. B175450.,B175450.
• Court: California Court of Appeals Court of Appeals
• Parties: SYNGENTA CROP PROTECTION, INC., Plaintiff and Appellant, v. Paul E. HELLIKER, as Director, etc., Defendant and Appellant; Gustafson LLC, Real Party in Interest and Appellant. Dow Agrosciences LLC, Plaintiff and Appellant, v. Paul E. Helliker, as Director, etc., Defendant and Appellant.

42 Cal.Rptr.3d 191

138 Cal.App.4th 1135

SYNGENTA CROP PROTECTION, INC., Plaintiff and Appellant, v. Paul E. HELLIKER, as Director, etc., Defendant and Appellant;

Gustafson LLC, Real Party in Interest and Appellant.

Dow Agrosciences LLC, Plaintiff and Appellant, v. Paul E. Helliker, as Director, etc., Defendant and Appellant.

No. B175450.

Court of Appeal, Second District, Division 3.

April 25, 2006.

McKenna Long & Aldridge, Stanley W. Landfair, San Francisco, Joseph F. Butler, Robert S. Schuda, Shannon L. Fagan, Michael J. Stiles, Los Angeles, and Eric S.C. Lindstrom, San Francisco, for Plaintiffs and Appellants.

Bill Lockyer, Attorney General, Tom Greene, Chief Assistant Attorney General, Mary E. Hackenbracht, Assistant Attorney General, William S. Abbey and Todd A. Valdes, Deputy Attorneys General, for Defendant and Appellant.

Murchison & Cumming, Edmund G. Farrell III, Gina E. Och, Los Angeles; Kessler & Collins, Gary S. Kessler and Daniel P. Callahan, Santa Ana, for Real Party in Interest and Appellant.

CROSKEY, J.

Syngenta Crop Protection, Inc. (Syngenta), developed a substance known as metalaxyl, and Dow Agrosciences LLC (Dow) developed a substance known as oryzalin, both used as active ingredients in pesticides. Syngenta and Dow submitted to the state Department of Pesticide Regulation (the Department)¹ data concerning the health effects and environmental impacts of the active ingredients and obtained certificates of registration from the Department for products containing metalaxyl and oryzalin. Gustafson LLC (Gustafson), a pesticide manufacturer, later obtained registrations from the Department for pesticides containing metalaxyl, and other companies obtained registrations for pesticides containing oryzalin. Although the Department did not actually review data previously submitted to the Department by Syngenta and Dow to support the applications for registration by Gustafson and other subsequent applicants, the Department took into account its prior evaluation of those data in evaluating the later applications. Syngenta challenged the registrations and the Department's practices by filing a complaint and petition for writ of mandate in the superior court seeking declaratory and injunctive relief and a writ of mandate, and Dow did the same. Syngenta and Dow allege that in evaluating applications for registration, the Department "considered" data that Syngenta and Dow previously submitted to the Department, without their consent, in violation of former Food and Agricultural Code section 12811.5.²

On cross-motions for summary judgment or summary adjudication in the consolidated proceedings, the court awarded declaratory relief in favor of Syngenta and Dow, declaring that former Food and Agricultural Code section 12811.5 prohibited the Department from considering, "actively or passively," data submitted by an original registrant when considering a subsequent application for registration by another applicant who had not obtained the original registrant's written consent. The court did not determine whether the Department violated former section 12811.5, however, and denied injunctive relief. The court rejected other challenges to pesticide registrations and regulatory actions and granted summary adjudication against all counts other than the count for declaratory relief. Syngenta, Dow, the Department, and Gustafson all appeal the judgment.

We conclude that former Food and Agricultural Code section 12811.5 prohibited the consideration of data by the Department in the manner at issue here. We also conclude that there are triable issues of material fact as to whether the Department violated former section 12811.5, whether the Department's use of trade secret data constitutes an unconstitutional taking, and whether Syngenta and Dow are entitled to an injunction under the Uniform Trade Secrets Act (Civ.Code, § 3426 et seq.); that Syngenta and Dow cannot establish a violation of the equal protection clause; and that the sustaining of demurrers to Syngenta's count for a writ of mandate was error. We conclude further that the Department failed to comply with procedural requirements of the Administrative Procedures Act (Gov.Code, § 11340 et seq.; APA) in adopting regulations and failed to comply with the Department's own regulation requiring public notice of regulatory amendments, and that the regulations are invalid.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background

Syngenta, through a corporate predecessor, invented metalaxyl and obtained its first registration of a pesticide product containing metalaxyl from the United States Environmental Protection Agency (U.S.EPA) in 1979 and from the Department in 1982. Syngenta submitted numerous studies concerning the chemistry, health effects, and environmental impacts of the substance in support of the federal and state registrations, as required by law. Syngenta no longer manufactures metalaxyl and now manufactures a replacement product known as mefenoxam. Syngenta notified the Department in May 1998 that it would not authorize the consideration of data previously submitted by Syngenta concerning metalaxyl to support any registration by another applicant.

Gustafson manufactures pesticide products known as Allegiance FL, Raxil XT, and Raxil MD, all containing metalaxyl. Allegiance FL was formerly known as Apron FL. Gustafson obtained its first California registration of Apron FL in 1984. Gustafson purchased metalaxyl from Syngenta at that time and obtained written authorization from Syngenta for the Department to consider data previously submitted by Syngenta to support the application for registration by Gustafson. Gustafson now purchases metalaxyl from another company, Nations Ag II, LLC (Nations Ag).

Gustafson applied to the Department to amend the registration of Allegiance FL in 1998 and applied for registration of the Raxil products in 2000. The Department issued notices in May 1999 and July 2001 stating that it intended to approve the applications. Gustafson withdrew the applications for registration of the Raxil products in August 2001, after Syngenta commenced this proceeding (case No. BC253673), and submitted new applications in November 2001. Gustafson submitted several studies concerning the health effects of the products in support of its applications and submitted a letter of authorization from Nations Ag allowing the Department to consider data previously submitted by Nations Ag concerning metalaxyl. Gustafson did not submit data previously submitted by Syngenta, refer the Department to data previously submitted by Syngenta in the Department's files, or obtain written authorization from Syngenta for the Department to consider data previously submitted by Syngenta.

Dow invented oryzalin and obtained registrations of pesticide products containing oryzalin from the U.S. EPA and the Department. Nations Ag and other companies later applied to the Department for registration of products containing oryzalin, but did not obtain written authorization from Dow for the Department to consider data previously submitted by Dow in support of the applications. The Department issued notices stating that it intended to approve the applications.

2. Trial Court Proceedings

Syngenta filed a combined complaint and petition for writ of mandate in the superior court in July 2001 (case No. BC253673). In its second amended complaint and petition filed in January 2002, Syngenta alleged that Gustafson's applications for registration were incomplete because they were not supported by the required data and that the Department improperly was considering or had considered data previously submitted by Syngenta to support the applications by Gustafson, without Syngenta's consent. Syngenta alleged counts for (1) a peremptory writ of mandate directing the Department to deny Gustafson's applications for registration of Raxil MD and Raxil XT, its application to amend the registration of Allegiance FL, and any application for a renewed registration of those products or of Apron FL, and to set aside the prior registration of Allegiance FL; (2) violation of former Food and Agricultural Code section 12811.5 and California Code of Regulations, title 3, section 6170, seeking a prohibitory injunction; (3) violation of the Uniform Trade Secrets Act, seeking a prohibitory injunction; (4) unlawful taking without just compensation under the United States and California Constitutions; (5) violation of the equal protection clauses of the United States and California Constitutions; and (6) declaratory relief, seeking a declaration that the Department's past, present, and future consideration of data previously submitted by Syngenta in support of an application for registration by another applicant, without Syngenta's consent, is unlawful.

Gustafson and the Department demurred, arguing with respect to the first count that mandamus was not available to compel the Department to perform a discretionary act in a particular manner. The court sustained the demurrers to the first count without leave to amend in March 2002 and later overruled the demurrers to other counts.

3. Product Registrations

The Department issued conditional registrations for the Raxil products in April 2002. The registrations were conditioned on Gustafson's submission of certain data. The Department apparently later issued renewed registrations for all three products.

4. California Notice 2002-3 and Regulatory Amendments

The Department issued California Notice 2002-3 (the Notice) in April 2002 describing the general data requirements for registration of a new pesticide product containing a currently registered active ingredient. The Notice stated, "Some have incorrectly assumed that DPR has the same data requirements for registration actions, such as amendments to currently registered pesticides and new products containing currently registered active ingredients, as it does for new pesticide products...