David G. Campbell, United States District Judge.
Defendant City of Phoenix has passed an ordinance regulating pet stores ("the Ordinance"). Under the Ordinance, pet stores may not sell dogs or cats obtained from persons or companies that breed animals. Pet stores may sell only animals obtained from animal shelters or rescue organizations. Puppies `N Love operates a pet store in Phoenix that sells purebred dogs obtained from out-of-state breeders. Puppies `N Love and its owners have sued the City, claiming primarily that the Ordinance violates the dormant Commerce Clause of the United States Constitution by closing the Phoenix market to out-of-state breeders and giving an economic advantage to local breeders. The parties, including Intervenor Humane Society of the United States ("HSUS"), have filed motions for summary judgment (Docs. 143, 147, 151), and the Court heard oral argument on July 10, 2015. For the reasons that follow, the Court will deny Plaintiffs' motion and grant the motions of the City and the HSUS.
The federal government regulates the treatment of animals through the Animal Welfare Act ("AWA"), which sets standards for the treatment of certain animals that are bred for sale, exhibited to the public, used in biomedical research, or transported commercially. See 7 U.S.C. §§ 2131-59. As relevant here, the AWA regulates the activities of most breeders of dogs by requiring them to have a license before selling their animals. 9 C.F.R. § 2.1(a). A breeder becomes eligible for a license by agreeing to follow specified standards for caring for animals. Id. § 2.2(a). These standards include housing dogs in appropriate enclosures (9 C.F.R. § 3.1), regularly exercising them (§ 3.8), feeding them once a day (§ 3.9), and reducing pest contamination in animal areas (§ 3.11). The United States Department of Agriculture ("USDA") enforces the AWA by inspecting breeders and imposing penalties for violations. 7 U.S.C. §§ 2147, 2149.
Some believe that the AWA does not adequately protect dogs. See, e.g., Doc. 1481 at 213-14. They argue that lax enforcement and poor standards have led to a proliferation of "puppy mills" where dogs are bred in large numbers and inhumane
Many states and municipalities have decided to impose stricter standards on animal breeders and pet stores. See Doc. 157, ¶¶ 10-14. Missouri, where a large number of USDA-licensed breeders are located, requires breeders to keep dogs in large and impervious cages, provide regular opportunities for outdoor exercise, and provide comprehensive annual veterinary exams. See Mo.Rev.Stat. § 273.345; see also Doc. 137-1 at 16-18. Indiana, Iowa, Oklahoma, and Texas have passed similar laws. See Doc. 157, ¶¶ 10-14. Although not directly regulating animal breeders, Arizona has passed a law regulating retail pet stores. See A.R.S. §§ 44-1799 et seq. Under this law, pet stores must adequately care for their animals and ensure the good health of animals before selling them. Id.
In recent years, cities such as Austin, Chicago, Los Angeles, Miami, and San Diego have passed ordinances prohibiting pet stores from selling dogs obtained from certain types of breeders. See Krysten Kenny, A Local Approach to A National Problem: Local Ordinances As A Means of Curbing Puppy Mill Production and Pet Overpopulation, 75 Alb. L.Rev. 379, 379 (2012). The HSUS is a proponent of these ordinances. Doc. 137-23 at 5-12. The HSUS believes that because many pet shops sell dogs obtained from puppy mills, governments should limit pet shops to selling dogs obtained from animal shelters. Id. On December 18, 2013, with encouragement from the HSUS, Phoenix joined the other cities in passing a pet-store ordinance. Doc. 136-1 at 26. The Ordinance is entitled "[p]rohibition on sale of dogs or cats" and states:
Doc. 136-1 at 2-6.
In sum, the Ordinance prevents pet shops from selling animals obtained from commercial breeders. Pet shops may sell animals obtained only from shelters and rescue organizations. Breeders and animal shelters within the City may, however, continue selling directly to customers.
In Maricopa County, which encompasses Phoenix and other cities, the Maricopa County Animal Care and Control organization ("MCACC") shelters unwanted dogs and cats. Doc. 148-1 at 241-42. In 2014, MCACC took in 38,235 animals, almost 34,000 of which were dogs. Id.; Doc. 157-42 at 5. MCACC found new homes for 11,382 of these animals, euthanized 10,160, and returned 4,183 to their original owners. Doc. 157-42 at 5. MCACC also transferred 12,129 of these animals to other animal rescue organizations through its New Hope program. Doc. 157-43 at 2. Partners in the New Hope Program include the Arizona Humane Society and the Arizona Animal Welfare League. Doc. 148-1 at 243. MCACC and other rescue organizations believe that the Ordinance will reduce animal homelessness and result in more adoptions. Id. at 245-47.
Many breeders located in the City of Phoenix offer pets for sale and often advertise through the internet. Doc. 137-31-35. Some of these breeders are commercial operations. Others may be described as "backyard breeders" with little experience and low standards for dog breeding. Doc. 152-1 at 17; Doc. 137-24 at 23. Out-of-state breeders also sell dogs to Phoenix residents, either through the internet or local pet stores. Almost all of these breeders believe that there are disadvantages in selling pets through the internet. See Doc. 137-36 at 20, 25, 31, 35. Not only are there costs associated with advertising on the internet, but sales can be difficult to make. Customers may suspect that internet dealers are fraudulent. See id. at 9-10, 16. More importantly, customers want to interact with an animal before buying it as a pet. Id. at 21, 26, 32, 36. For that reason, out-of-state breeders rely on local pet stores like Puppies `N Love to sell their dogs to Phoenix residents. Id. As one Arkansas breeder put it: "Without access to a local pet store in Phoenix, I would be unable to compete with local breeders, who would have preferential access to local residents by virtue of their physical location in or near the city." Id. at 20.
The Ordinance will have a significant impact on Puppies `N Love, which operates
Puppies `N Love asserts that it does not buy from puppy mills. Doc. 137-6 at 28. Rather, the store buys puppies only from USDA-licensed breeders and hobby breeders that have four or fewer breeding females. Id. If a breeder is reported to have one direct or three indirect violations of USDA standards, Puppies `N Love states that it will not do business with that breeder. Id.; Doc. 137, ¶ 14. The store has a full-time employee who ensures that the breeders are "providing excellent and loving conditions in which dogs are bred and raised." Doc. 137-6 at 28.
Despite these policies, Puppies `N Love has done business with at least three breeders who have had direct violations of USDA standards. Doc. 137, ¶ 21. One of these breeders arguably is a prototypical puppy mill. Doc. 148 at 6-12. This breeder breeds female dogs every six to twelve months, keeps dogs in small enclosures without solid flooring, and has at most six employees to take care of approximately 700 dogs. Id. at 6-7. Although Puppies `N Love disputes this characterization and argues that the breeder has a good business reputation (Doc. 157, ¶¶ 72-88), the store no longer buys from him and others who have directly violated USDA standards (Doc. 137, ¶¶ 21-22, Doc. 157-22 at 77).
Frank and Vicki Mineo own and operate Puppies `N Love. Doc. 137-6 at 28, 36. Because Puppies `N Love does not buy dogs from animal shelters, they believe that the Ordinance will force them to close their store in Phoenix. Id. at 29-30, 37-38. They considered the possibility of selling dogs from shelters, but found that it is not economically feasible. Id. at 30. They believe that they could not compete on a for-profit basis with subsidized shelters and humane societies that provide the same dogs for free or a minimal price. Id. at 29; Doc. 11-1 at 13. The Mineos and Puppies `N Love therefore brought suit against the City, claiming that the Ordinance violates the dormant Commerce Clause, the Equal Protection Clause, and the Arizona Constitution's prohibition on special laws. Doc. 1. They also claim that the Ordinance is preempted by A.R.S. § 44-1799 and is unconstitutionally vague.
On April 2, 2014, the Court granted Plaintiffs' request for a preliminary injunction. Doc. 41. The Court found that the balance of hardships tipped sharply in Plaintiffs' favor and that the existence of serious merits questions warranted preliminary injunctive relief. Id. (citing Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.2011)).
The Ordinance is not a model of clarity. It states that "pet shops" may sell only animals obtained from animal shelters and nonprofit rescue organizations. Id. at 5. This much is clear, but the Ordinance's exception for breeders is less so. It provides that "[a] person or establishment, other than a pet shop or pet dealer," may sell "dogs and cats that were bred and reared on the premises of the person or establishment." Id. at 5-6. But if a person or establishment sells dogs and cats that are kept on-site, then that person or establishment would fall within the Ordinance's definition of a pet shop: "any establishment at which are kept for sale any animals generally considered to be household pets, but excluding kennels or livery stables." Doc. 136-1 at 4. Thus, the breeder exception—that "a person or establishment, other than a pet shop," may sell dogs and cats that are bred onsite—could be viewed as meaningless because the instant a person or establishment sells dogs and cats that are kept on-site it becomes a pet shop not allowed to sell these animals. The only meaningful reading of these provisions is that establishments selling dogs and cats that are bred on-site are breeders, regardless of the definition of pet shop, and may sell the animals. Otherwise, the exemption for breeders would be meaningless, an interpretation the Court should avoid. See Mejak v. Granville, 212 Ariz. 555, 136 P.3d 874, 876 (2006) ("[Courts] must interpret the statute so that no provision is rendered meaningless, insignificant, or void.").
Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(a). Summary judgment is also appropriate against a party who "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment, and the disputed evidence must be "such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When presented with cross-motions for summary judgment, "the court must consider each party's evidence, regardless under which motion the evidence is offered." Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir.2011).
The Commerce Clause grants Congress the power to "regulate Commerce. . . among the several States[.]" U.S. Const. art. I, § 8, cl. 3. The Clause also contains a "`Negative' aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce." Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality of State of Or., 511 U.S. 93, 98, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994). This negative aspect has come to be known as the "dormant Commerce Clause." Dep't of Revenue of Ky. v. Davis, 553 U.S. 328, 337, 128 S.Ct. 1801, 170 L.Ed.2d 685 (2008). Courts "analyze dormant Commerce Clause claims using the Supreme Court's two-tiered approach." Pharm. Research & Mfrs. of Am. v. Cnty. of Alameda, 768 F.3d 1037, 1041 (9th Cir.2014). "The first tier asks whether the Ordinance `either discriminates against or directly regulates interstate commerce.'" Id.
The restraints of the dormant Commerce Clause do not apply when a "local government enters the market as a participant," White v. Mass. Council of Const. Employers, Inc., 460 U.S. 204, 208, 103 S.Ct. 1042, 75 L.Ed.2d 1 (1983), or Congress has authorized "regulations that burden or discriminate against interstate commerce," Hillside Dairy Inc. v. Lyons, 539 U.S. 59, 66, 123 S.Ct. 2142, 156 L.Ed.2d 54 (2003).
Plaintiffs argue that the Ordinance directly regulates interstate commerce, discriminates against interstate commerce by its effect and purpose, and unduly burdens interstate commerce. Plaintiffs' reasoning relies not on the Ordinance's effect on local pet shops, but on the fact that it bars out-of-state breeders from selling animals through pet shops in the City of Phoenix. Plaintiffs assert that the practical effect of this bar is to grant an advantage to local breeders and impose a disadvantage on out-of-state breeders in the sale of puppies.
The City argues that even if the Ordinance discriminates against interstate commerce, the AWA permits the City to discriminate. As already noted, the AWA sets standards for the humane care and treatment of certain animals that are bred for sale, exhibited to the public, used in research, or transported commercially. See 7 U.S.C. §§ 2131-59. When passing and amending the AWA, Congress envisioned the cooperation of federal and state officials "in carrying out the purposes of this chapter and of any State, local, or municipal legislation or ordinance on the same subject." Id. § 2145(b). The AWA contains a subsection that requires the Secretary of Agriculture to "promulgate standards to govern the humane handling, care, treatment, and transportation of animals by dealers, research facilities, and exhibitors." Id. § 2143(a)(1). In a savings clause, the AWA clarifies that this subsection—§ 2143(a)(1)—"shall not prohibit
The City argues that the savings clause expresses a congressional intent to authorize local regulations of the sale of pets, even if those regulations discriminate against interstate commerce. Although it is true that Congress "has the power to authorize state regulations that burden or discriminate against interstate commerce," courts "will not assume that it has done so unless such an intent is clearly expressed." Hillside Dairy, 539 U.S. at 66, 123 S.Ct. 2142 (2003) (citations omitted). A court may exempt a local law from the requirements of the dormant Commerce Clause "only when the congressional direction to do so has been `unmistakably clear,'" Maine v. Taylor, 477 U.S. 131, 139, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986) (quoting South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 91, 104 S.Ct. 2237, 81 L.Ed.2d 71 (1984)), and the defendant has demonstrated "a clear and unambiguous intent on behalf of Congress to permit the discrimination against interstate commerce," Wyoming v. Oklahoma, 502 U.S. 437, 458, 112 S.Ct. 789, 117 L.Ed.2d 1 (1992).
The AWA's savings clause does not clearly and unambiguously authorize Phoenix to enact an ordinance that discriminates against interstate commerce. It provides that the City may adopt standards for the humane handling, care, treatment, and transportation of animals by dealers, research facilities, and exhibitors, but it does not explicitly say that the City may enact an ordinance that discriminates against out-of-state breeders in purpose or effect. The City argues that the Court should give the savings clause a "broad interpretation" (Doc. 151 at 10), but the Supreme Court has made clear that a broad interpretation is not permitted. Courts may not find that Congress has authorized local laws that discriminate against interstate commerce unless Congress's intent is "clearly expressed," Hillside Dairy, 539 U.S. at 66, 123 S.Ct. 2142, "unmistakably clear," Maine, 477 U.S. at 139, 106 S.Ct. 2440, and "clear and unambiguous," Wyoming, 502 U.S. at 458, 112 S.Ct. 789. The savings clause does not meet this exacting standard.
The clause says nothing about interstate commerce. It provides that another provision, § 2143(a)(1), does not "prohibit" states and local governments from promulgating standards. 7 U.S.C. § 2143(a)(8). This appears to be a clear indication that § 2143(a)(1)'s grant of standard-making authority to the Secretary of Agriculture does not preempt state or local standards that go beyond the Secretary's standards. But saying that the statute does not prohibit such additional standards is not the same as saying that the dormant Commerce Clause does not prohibit burdens on interstate commerce. The savings clause speaks only about the effect of § 2143(a)(1); it says nothing about any other provision of law. It certainly is not an unmistakably clear statement that the dormant Commerce Clause—a different provision of law—does not bar local laws that discriminate against interstate commerce.
In only a few instances has the Supreme Court found congressional authorization of discrimination against interstate commerce. For example, the Court found that the following statutory language approved discrimination:
In contrast, the Court construed the following language as not approving discrimination:
Although the distinction is not crystal clear, these comparisons suggest that congressional authorization to discriminate exists when a federal law quite clearly disavows the dormant Commerce Clause (Prudential) or provides that nothing in any provision of law "either directly or indirectly" limits the states' authority to regulate an aspect of commerce (Hillside Dairy). In contrast, authorization to discriminate does not exist when a federal law merely clarifies that it does not preempt state law or deprive a state of its existing authority, or when it expressly recognizes laws enacted by the states (Sporhase, New England Power, Granholm). The AWA's savings clause aligns more closely with the latter category of cases.
The City highlights the AWA's opening policy statement in which Congress declares that (1) the regulation of animals is necessary "to prevent and eliminate burdens" upon interstate commerce, and (2) "it is essential" to regulate the sale of animals as pets. Id. § 2131. The Court fails to see how these statements—which
The City next argues that the Ordinance is exempt from Commerce Clause scrutiny because the City was acting as a market participant when it passed the Ordinance. "Nothing in the purposes animating the Commerce Clause prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others." Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810, 96 S.Ct. 2488, 49 L.Ed.2d 220 (1976). "[I]f a State is acting as a market participant, rather than as a market regulator, the dormant Commerce Clause places no limitation on its activities." South-Central Timber Dev., 467 U.S. at 93, 104 S.Ct. 2237 (plurality).
The critical inquiry is "`whether the challenged program constitute[s] direct state participation in the market.'" White, 460 U.S. at 208, 103 S.Ct. 1042 (quoting Reeves, Inc. v. Stake, 447 U.S. 429, 435 n. 7, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980) (internal quotations omitted)). The Supreme Court has applied the market-participant exception where a state operated a cement plant and restricted the sale of the plant's cement to in-state purchasers (Reeves); where a city required all city-funded construction projects to be performed by crews that included city residents (White); and where counties established a waste-processing facility and required all solid waste generated within the counties to be delivered to that facility (United Haulers).
The Court is unable to discern, nor does the City adequately explain, how the market-participant exception applies to this case. The City emphasizes that, through its financial support for MCACC and in other ways, the City participates in the market of rescuing and adopting out homeless animals. This may be true, and the Ordinance may benefit the City's participation in parts of that market, but in attempting to re-configure the market for pets the City is acting as a market regulator, not as a market participant. The City has not adopted a policy that it, as a market participant, will do business only with certain pet shops. It has not stipulated that pet shops within the City must buy animals solely from City-sponsored operations. The Ordinance reaches more broadly, driving private pet shops like Puppies `N Love out of business regardless of whether they do business with the City and potentially benefiting non-governmental animal shelters and private breeders alike. Thus, this case is not like Reeves, where a state operated a cement plant and restricted the sale of its cement to in-state purchasers, or White, where a city required all city-funded construction projects to be performed substantially by
The dormant Commerce Clause precludes "extraterritorial" regulation of commerce, that is, "the application of a state statute to commerce that takes place wholly outside of the State's borders, whether or not the commerce has effects within the State." Edgar v. MITE Corp., 457 U.S. 624, 642-43, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982) (plurality). "[A] statute that directly controls commerce occurring wholly outside the boundaries of a State exceeds the inherent limits of the enacting State's authority and is invalid regardless of whether the statute's extraterritorial reach was intended by the legislature." Healy v. Beer Inst., Inc., 491 U.S. 324, 336, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989). "The critical inquiry is whether the practical effect of the regulation is to control conduct beyond the boundaries of the State." Id. (citing Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986)).
Plaintiffs argue that the Ordinance regulates conduct occurring outside of the City. Specifically, Plaintiffs argue that the City is attempting "to do indirectly what it lacked authority to do directly—that is, change regulatory standards in other jurisdictions by restricting access to its own local market." Doc. 143 at 18.
The Court is not persuaded. Plaintiffs would have a better argument if the Ordinance provided that out-of-state breeders may sell to Phoenix pet shops only if they change their business to conform to the City's standards. The Ordinance does not do that. It instead prohibits the sale of commercially-bred animals in local pet stores regardless of the conditions under which they were bred or the regulations of their local jurisdictions. Because out-of-state breeders and their governing cities and states can do nothing to gain access to Phoenix pet shops, the Ordinance is not an attempt to change their conduct. Plaintiffs have not shown that "the practical effect of the regulation is to control conduct beyond the boundaries of the [City]." Healy, 491 U.S. at 336, 109 S.Ct. 2491.
"The principal objects of dormant Commerce Clause scrutiny are statutes that discriminate against interstate commerce." CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 87, 107 S.Ct. 1637, 95 L.Ed.2d 67 (1987). A law "`can discriminate against out-of-state interests in three different ways: (a) facially, (b) purposefully, or (c) in practical effect.'" Nat'l Ass'n of Optometrists & Opticians v. Brown (Nat'l Ass'n of Optometrists I), 567 F.3d 521, 525 (9th Cir.2009) (quoting LensCrafters, Inc. v. Robinson, 403 F.3d 798, 802 (6th Cir.2005)). "The party challenging the statute bears the burden of showing discrimination." Black Star Farms, LLC v. Oliver, 600 F.3d 1225, 1230 (9th
Plaintiffs do not contend that the Ordinance is facially discriminatory. On its face, the Ordinance treats in-state and out-of-state breeders the same—none of them can sell to Phoenix pet stores. Plaintiffs do assert that the Ordinance discriminates in effect and purpose. The Court will consider these alleged forms of discrimination separately.
Although the general principles for identifying practical-effect discrimination are rather easily stated, they are difficult to apply. Supreme Court cases considering whether laws have the effect of discriminating against interstate commerce have produced a wide variety of results, and the language of these cases at times appears inconsistent. Justice Scalia has observed that "once one gets beyond facial discrimination our negative-Commerce-Clause jurisprudence becomes (and long has been) a quagmire." W. Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 210, 114 S.Ct. 2205, 129 L.Ed.2d 157 (1994) (Scalia, J., concurring) (internal quotation marks omitted). As another commentator has noted, the Supreme Court "never has articulated clear criteria for deciding when proof of a discriminatory purpose and/or effect is sufficient for a state or local law to be discriminatory. Indeed, the cases in this area seem quite inconsistent." E. Chemerinsky, Constitutional Law, Principles and Policies 444-45 (4th ed.2011).
The central question is whether Plaintiffs have shown that the effect of the Ordinance is to burden out-of-state breeders and benefit in-state breeders. Plaintiffs must bring "`substantial evidence of an actual discriminatory effect[.]'" Black Star, 600 F.3d at 1231 (quoting Black Star Farms, LLC v. Oliver, 544 F.Supp.2d 913, 928 (D.Ariz.2008)). An incidental burden on out-of-state interests and a "de minimis benefit" to local interests is "insufficient to trigger strict scrutiny." Id. at 1235. "Courts examining a `practical effect' challenge must be reluctant to invalidate a state statutory scheme . . . simply because it might turn out down the road to be at odds with our constitutional prohibition against state laws that discriminate against Interstate Commerce." Id. at 1232 (emphasis in original). Furthermore, "[t]he fact that the burden of a state regulation falls on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce." Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 126, 98 S.Ct. 2207, 57 L.Ed.2d 91 (1978). Rather, Plaintiff must show that "the effect of [the] regulation is to cause local goods to constitute a larger share, and goods with an out-of-state source to constitute a smaller share, of the total sales in the market." Id. at 126, 98 S.Ct. 2207 n. 16.
In demonstrating a discriminatory effect, Plaintiff must also show that the Ordinance has differing effects on similarly
The Court also restricts its analysis to the effects of the Ordinance within the boundaries of the City of Phoenix. The Supreme Court has instructed that "a State (or one of its political subdivisions) may not avoid the strictures of the Commerce Clause by curtailing the movement of articles of commerce through subdivisions of the State, rather than through the State itself." Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dep't of Natural Res., 504 U.S. 353, 361, 112 S.Ct. 2019, 119 L.Ed.2d 139 (1992); see also BFI Med. Waste Sys. v. Whatcom Cnty., 983 F.2d 911, 913 (9th Cir.1993) ("[L]aws that discriminate against out-of-state business interests are per se unconstitutional even if it is a county rather than the state itself that discriminates[.]"). Thus, "discrimination is appropriately assessed with reference to the specific subdivision in which applicable laws reveal differential treatment." Associated Indus. of Missouri v. Lohman, 511 U.S. 641, 650, 114 S.Ct. 1815, 128 L.Ed.2d 639 (1994).
The crux of Plaintiff's discriminatory-effect argument is as follows. Under the Ordinance, no breeder is allowed to sell its animals through retail pet stores, but every breeder is allowed to sell its animals directly to the public. Most customers like to see and interact with an animal before buying it as a pet. Because an out-of-state breeder is unable under the Ordinance to sell its animals through pet stores, customers can interact with that breeder's animals only by travelling across state-lines to the breeder's location. The effect of this, Plaintiffs argue, is to impose a competitive disadvantage vis-à-vis local breeders because customers seeking to interact with commercially-bred pets are more likely to visit a local breeder that is closer. The primary means for out-of-state breeders to offset this advantage was to sell their animals through local pet stores. Because the Ordinance closes off this distribution channel, Plaintiffs reason, consumers within the city will buy fewer dogs from out-of-state breeders and more dogs from local breeders.
Although Plaintiffs' argument has logical appeal, the Court ultimately concludes that Plaintiffs have failed to present evidence with which they could carry their burden of proof at trial. As noted above, "[t]he party challenging the statute bears the burden of showing discrimination." Black Star, 600 F.3d at 1230. Discrimination occurs when a law treats similarly situated "in-state and out-of-state economic interests" in a way "that benefits the former
First, Plaintiffs have demonstrated no more than an incidental or de minimis burden on out-of-state breeders. Plaintiffs have proffered numerous affidavits of such breeders. These affidavits show that the effect of the Ordinance will be to impede out-of-state breeders' ability to sell their dogs in the Phoenix market. The breeders state that "[w]ithout access to a local pet store in Phoenix I would be unable to compete with local breeders" because the only practical way for Phoenix residents to "see and play with a prospective pet" from an out-of-state breeder is for them to visit a local pet store. See, e.g., Doc. 137-36 at 20, 25, 31, 35. Furthermore, the affidavits state that selling over the internet is not the equivalent of selling dogs through a local pet store. As one breeder explained, "consumers would much prefer to see and play with their puppy before they buy. People are wary of buying a puppy sight unseen over the internet. The potential for fraud is too high, and there is no way for consumers to know for sure that they are purchasing a healthy, quality puppy." Id. at 41. And several breeders affirm that "[a]dopting an internet sales model would require me to completely change how I do business and would require the expenditure of substantial sums to set up and run a website, hire retail staff, and market to consumers in Arizona." Id. at 21, 26, 32, 36.
The problem with this evidence is that it does nothing to establish the magnitude of the Ordinance's burden on out-of-state breeders. True, it suggests that some breeders will lose their Phoenix sales, but the mere "fact that the burden of a state regulation falls on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce." Exxon Corp., 437 U.S. at 126, 98 S.Ct. 2207. To establish a discriminatory effect, Plaintiff must show that the Ordinance will create more than an incidental burden on interstate commerce. Plaintiff has come forward with no evidence proving such a burden.
The undisputed evidence is that Puppies `N Love sells approximately 500 dogs a year. Doc. 137, ¶ 67; Doc. 152-1 at 32. Almost all of these dogs are obtained from out-of-state breeders. Doc. 167-1 at 3. Even if out-of-state breeders were unable to sell these dogs through other Arizona pet stores, Plaintiff has not shown that this is a substantial or significant burden on interstate commerce. Indeed, Plaintiffs have provided no evidence from which a factfinder could determine whether this effect on out-of-state breeders would be substantial or de minimis.
Based on the number of puppies that were licensed in Maricopa County, Defendant's expert has estimated Puppies `N Love's share of the local puppy market. Doc. 152-1 at 32. The expert estimates that the 500 dogs sold annually through Puppies `N Love's Phoenix store constitutes just 2.2% of the total dog market in Maricopa County and 1.2% of the dog market in Arizona. Id. Plaintiff does not dispute this point. Doc. 152, ¶ 8; Doc. 157 at 27. Admittedly, this is an imperfect comparison because it includes dogs sold by entities other than commercial breeders. But it is at least one data point from which to assess the magnitude of 500 sales, and
The same is true with respect to the benefits conferred by the Ordinance on local breeders. Those breeders will not necessarily be making 500 more sales each year as a result of the Ordinance. A Phoenix resident who is no longer able to buy a dog from the Puppies `N Love store in Phoenix might make a number of decisions. She might adopt a puppy from a local animal shelter or humane society, travel to a pet store located a few miles away in one of the many neighboring cities in the greater Phoenix area, or decide not to buy a puppy at all.
Plaintiffs do argue that the Ordinance creates a competitive advantage for local breeders because they do not have to compete with out-of-state breeders selling through a nearby pet store. But an abstract competitive advantage for in-state businesses is not discrimination under the dormant Commerce Clause. Rather, Plaintiff must present evidence from which a reasonable factfinder could conclude that the effect of the Ordinance will be to confer more than a de minimis benefit on local breeders. In addition to providing no evidence from which to quantify in any reasonable degree the number of sales that will be gained by local breeders under the Ordinance, Plaintiffs have failed to present evidence from which a jury could determine whether that benefit is more than de minimis when compared to the total volume of business done by local breeders. Plaintiffs present no evidence of that volume.
Plaintiffs argue that there is no de minimis exception to the dormant Commerce Clause. This argument is foreclosed by the Ninth Circuit. In Black Star, the Ninth Circuit considered a state law that allowed wineries, wherever located, to ship two cases of wine per year directly to consumers, so long as the consumers were physically present at the wineries when they purchased the wine. 600 F.3d at 1228. Out-of-state wineries argued—no doubt with the same logical appeal that Plaintiffs present here—that the law gave an unfair advantage to in-state wineries because customers were likely to visit those wineries in person, but unlikely to visit out-of-state wineries. In rejecting this argument, the Ninth Circuit held that "potential" harm to interstate commerce is not enough to trigger strict scrutiny under the dormant Commerce Clause, and that "[a] de minimis benefit to in-state wineries is also insufficient to trigger strict scrutiny." Id. at 1235.
The Court finds this de minimis rule to be appropriate for several reasons. First, it appears to be the law of this Circuit. Second, it respects the sovereignty and power of local governments, leaving room for them to regulate on matters of legitimate local concern in ways that do not significantly burden interstate commerce. Indeed, the Supreme Court has observed that "the States retain `broad power' to legislate protection for their citizens in matters of local concern such as public health, and . . . not every exercise of local power is invalid merely because it affects in some way the flow of commerce between the States." Great Atl. & Pac. Tea Co. v. Cottrell, 424 U.S. 366, 371, 96 S.Ct. 923, 47 L.Ed.2d 55 (1976) (citations omitted). Third, as one court has noted, "[w]ere we to require no showing beyond the de minimis level, no distinction would exist between the discriminatory effect test and the incidental burden test employed by the Supreme Court in Pike." Cherry Hill Vineyard, 505 F.3d at 38-39. The Pike balancing test would become a nullity if the incidental effect required for Pike to apply were sufficient to trigger strict scrutiny.
Supreme Court cases do contain language suggesting that the extent of the burden on interstate commerce does not matter in dormant Commerce Clause analysis. For example, the Court has stated that "[t]he volume of commerce affected measures only the extent of the discrimination; it is of no relevance to the determination whether a State has discriminated against interstate commerce." Wyoming, 502 U.S. at 455, 112 S.Ct. 789 (emphasis in original). But this statement concerned a facially discriminatory law, and it makes sense that a facially discriminatory law would be deemed invalid without an examination of its effects. See New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 276, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988) ("Our cases . . . indicate that where discrimination is patent, as it is here, neither a widespread advantage to in-state interests nor a widespread disadvantage to out-of-state competitors need be shown."); Cherry Hill Vineyard, 505 F.3d at 38 ("It strikes us as implausible that the same de minimis standard would apply when evaluating whether a facially neutral statute has a discriminatory effect on interstate commerce.").
The Court recognizes that some Supreme Court cases have struck down local
As already noted, dormant Commerce Clause cases are not entirely clear or consistent. But the Court concludes that these Supreme Court cases—which can be explained either as addressing facially discriminatory laws or effective embargoes in significant industries—are not inconsistent with the de minimis rule adopted by the Ninth Circuit and applied in this case.
In sum, the Court concludes that more than a de minimis effect must be shown to prove that a local law has the effect of discriminating against interstate commerce, invoking strict scrutiny. Plaintiffs have not presented evidence that would allow a factfinder to find such an effect. The Court will enter summary judgment against Plaintiffs' claim that the Ordinance has a discriminatory effect on interstate commerce.
Plaintiffs also argue that the Ordinance was passed with the discriminatory purpose of favoring local over out-of-state breeders. The Supreme Court has stated that a "`finding that state legislation constitutes `economic protectionism' may be made on the basis of . . . discriminatory purpose[.]'" Chem. Waste Mgmt., Inc. v. Hunt, 504 U.S. 334, 344 n. 6, 112 S.Ct. 2009, 119 L.Ed.2d 121 (1992) (quoting Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 270, 104 S.Ct. 3049, 82 L.Ed.2d 200 (1984)); see also Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 471 n. 15, 101 S.Ct. 715, 66 L.Ed.2d 659 (1981). And the Supreme Court has found in several cases that a law had both a discriminatory purpose
The Court finds it incongruous to say that a law violates the dormant Commerce Clause merely by having a discriminatory purpose. As another court noted, "there is some reason to question whether a showing of discriminatory purpose alone will invariably suffice to support a finding of constitutional invalidity under the dormant Commerce Clause." Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 36 n. 3 (1st Cir.2005). If local lawmakers intend to discriminate in favor of local interests, but mistakenly pass a law that does not so discriminate, did those lawmakers violate the dormant Commerce Clause simply by their mistaken intentions? The Court doubts it. The dormant Commerce Clause is aimed at deflecting acts of economic protectionism, not mere intent. See Wal-Mart Stores, Inc. v. City of Turlock, 483 F.Supp.2d 987, 1012-13 (E.D.Cal.2006) (suggesting that discriminatory intent alone does not suffice to invalidate a law under the dormant commerce clause). Nevertheless, the Supreme Court has approved analyzing a law's purpose, and the Ninth Circuit has engaged in such analysis in dormant Commerce Clause cases. See, e.g., Nat'l Ass'n of Optometrists I, 567 F.3d at 525 (concluding the law did not have a discriminatory purpose). The Court therefore finds itself obliged to do so here.
In arguing that the Ordinance has a discriminatory purpose, Plaintiffs rely on statements from the HSUS, records of City Council meetings, and a newspaper editorial. Assuming that this evidence is admissible and relevant to the Ordinance's purpose, the Court finds that Plaintiffs have not shown that the purpose of the Ordinance was to burden out-of-state breeders in favor of local breeders. Rather, the stated purpose was to help eliminate animal cruelty by preventing puppy mills from selling their dogs through local pet stores. And although supporters were aware that local breeders might stand to benefit from the Ordinance, this was not the primary reason for its passage. A sampling of the evidence cited by Plaintiffs shows this to be true.
In support of the Ordinance, City of Phoenix Councilmembers Simplot and Williams wrote in a newspaper editorial:
Doc. 137-37 at 4. The formal agenda for the City Council meeting regarding the Ordinance stated that the Ordinance was aimed at eliminating "practices that are abusive to animals" and discussed the problems of puppy mills. Doc. 137-24 at 5. During the City Council meeting, proponents similarly argued that the Ordinance's purpose was to eliminate
The HSUS lobbied for the Ordinance and helped draft it. After the City Council passed the Ordinance, the HSUS issued a press release:
Doc. 137-36 at 44. In another statement, the HSUS noted that "[i]f the trend of rejecting puppy mill dogs continues, it is reasonable to expect an expansion in the number of small, home-based breeders. While the potential for inhumane conditions exists within the local breeder community, the smaller scale of home-based operations makes adequate care much easier to provide." Doc. 137-23 at 5.
As stated by its proponents, the purpose of the Ordinance was to help eliminate the inhumane treatment of animals by preventing puppy mills from selling their animals in Phoenix pet stores. The proponents were aware that the Ordinance might burden out-of-state businesses because most of the alleged puppy mills were located in other states. They were also aware that local breeders might benefit from the Ordinance because these breeders could continue to operate in the Phoenix market. But the Court cannot conclude that the proponents supported the Ordinance because it would shift sales from out-of-state breeders to local breeders or because puppy mills were usually located in other states.
A law that does not discriminate against interstate commerce, but "burden[s] interstate transactions only incidentally," is subject to what has come to be known as the Pike balancing test. See Maine, 477 U.S. at 138, 106 S.Ct. 2440. Under this test, "[w]here the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Pike, 397 U.S. at 142, 90 S.Ct. 844. The burdens to be weighed are those that a local law imposes on the "interstate flow of goods, not the share of profits obtained by . . . interstate corporations." Nat'l Ass'n of Optometrists & Opticians v. Harris (Nat'l Ass'n of Optometrists II), 682 F.3d 1144, 1155 (9th Cir.2012). The benefits to be weighed are the "putative" benefits of the law, not the actual benefits. Id. at 1155. Although the Pike test is deferential, courts have applied it to strike down non-discriminatory laws "where such laws undermined a compelling need for national uniformity in regulation." Gen. Motors Corp., 519 U.S. at 299 n. 12, 117 S.Ct. 811 (collecting cases).
Pike balancing is another area of some confusion in the law. As suggested above, the Court concludes that a law that has no more than a de minimis effect on interstate commerce is properly evaluated under the deferential test from Pike. This is consistent with the statement in Pike itself that the balancing test applies when the law's effect on commerce is "incidental." 397 U.S. at 142, 90 S.Ct. 844. The Ninth Circuit holds, however, that Pike balancing applies only when the law's effect on commerce is significant: "If a regulation merely has an effect on interstate commerce, but does not impose a significant burden on interstate commerce, it follows that there cannot be a burden on interstate commerce that is `clearly excessive in relation to the putative local benefits' under Pike." Nat'l Ass'n of Optometrists II, 682 F.3d at 1155. Such a significant effect, in the Court's view, suggests a discriminatory effect that would invoke strict scrutiny, not Pike balancing. The Ninth Circuit's approach thus seems to blur the line between strict scrutiny and Pike balancing, but this is not a new development. As other cases have noted, the line between strict scrutiny and Pike balancing is not easily discerned. See Gen. Motors Corp., 519 U.S. at 298 n. 12, 117 S.Ct. 811. The Court need not wrestle with this issue further, however, because it concludes that the Ordinance survives all versions of Pike balancing.
The Ordinance also survives more traditional Pike balancing. Leaving aside the benefit of reducing the market for puppy-mill dogs, which Plaintiffs argue is not a permissible local interest, the Ordinance also has the putative benefit of reducing Phoenix's problem with animal homelessness and euthanasia. As noted earlier, in 2014 MCACC took in 38,235 animals, almost 34,000 of which were dogs. Doc. 157-42 at 5. Although MCACC found new homes for 11,382 dogs and returned another 4,183 to their owners, approximately 10,160 dogs were euthanized. Id. at 5. By requiring pet stores to sell dogs from shelters instead of commercially-bred dogs, the Ordinance will have the putative benefits of increasing the number of adoptions and reducing dog homelessness and euthanasia. The Court cannot conclude that the de minimis burden imposed on interstate commerce by the Ordinance is "clearly excessive" when compared to this local benefit.
"The modern law of what has come to be called the dormant Commerce Clause is driven by concern about `economic protectionism, that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.'" Dep't of Revenue of Ky., 553 U.S. at 337-38, 128 S.Ct. 1801 (quoting New Energy Co., 486 U.S. at 273-74, 108 S.Ct. 1803). The Ordinance is not an act of economic protectionism. It is a legitimate attempt to curb the problems associated with the inhumane treatment of animals and local dog homelessness and euthanasia. Plaintiffs' claim that the Ordinance violates the dormant Commerce Clause fails as a matter of law.
Plaintiffs claim that the Ordinance violates the Equal Protection Clause of the United States Constitution and the Privileges or Immunities Clause of the Arizona Constitution. U.S. Const. amend. XIV; Ariz. Const. art. II, § 13. These clauses are "substantially the same in effect[.]" Chavez v. Brewer, 222 Ariz. 309, 214 P.3d 397, 408 (2009). "The Equal Protection Clause guarantees that the government will not classify individuals [and groups] on the basis of impermissible criteria." Coal. for Econ. Equity v. Wilson, 122 F.3d 692, 702 (9th Cir.1997). If a law's classification does not burden a fundamental right or a protected class of persons, the law must be upheld "if there is any reasonably conceivable state of facts that could provide a rational basis for the classification," F.C.C. v. Beach Commc'ns, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993), or "if `there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so
The parties agree that the Ordinance does not involve fundamental rights or suspect classifications. The relevant class consists of pet stores, which the Ordinance singles out in its regulations. Plaintiffs argue that the purpose of the Ordinance is to eliminate puppy mills, and that the Ordinance bears no rational relationship with this purpose because it targets pet stores like Puppies N' Love that do not buy dogs from puppy mills. The Court disagrees. Not only is it "reasonably conceivable" that pet stores obtain dogs from puppy mills, but Defendant has produced evidence that Puppies N' Love has bought dogs from a few breeders who have practices that some might view as inhumane. Doc. 148 at 6-12. Thus, "the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational." Nordlinger, 505 U.S. at 11, 112 S.Ct. 2326. And there is another legitimate purpose to which the Ordinance is rationally related—reducing animal homelessness and euthanasia. As already discussed, by requiring pet stores to sell animals obtained from shelters instead of breeders, the Ordinance could arguably reduce dog homelessness and euthanasia. See Doc. 148-1 at 245-46. The Ordinance does not violate the Equal Protection Clause or the Privileges or Immunities Clause.
The Arizona Constitution prohibits special laws that grant "to any corporation, association, or individual, any special or exclusive privileges, immunities, or franchises." Ariz. Const. art. IV, pt. 2 § 19(13). Nor shall a special law be enacted "[w]hen a general law can be made applicable." Id. § 19(20). "While the equal protection clause prohibits unreasonable discrimination against a particular class, the special legislation clause prohibits unreasonable discrimination in favor of a particular class." Lerma v. Keck, 186 Ariz. 228, 921 P.2d 28, 34 (1996) (emphasis in original). Thus, a law "may withstand equal protection review, yet still be found unconstitutional under the special/local law provision." Republic Inv. Fund I v. Town of Surprise, 166 Ariz. 143, 800 P.2d 1251, 1257 (1990). A law is general, not special, if: "(1) the classification is rationally related to a legitimate governmental objective, (2) the classification is legitimate, encompassing all members of the relevant class, and (3) the class is elastic, allowing members to move in and out of it." Long v. Napolitano, 203 Ariz. 247, 53 P.3d 172, 178 (2002) (citing Republic Inv. Fund I, 800 P.2d at 1257).
The essence of Plaintiffs' special-law argument is that the Ordinance bestows special favors on local breeders and animal shelters. More specifically, Plaintiffs argue that the Ordinance does not encompass all members of the relevant class. Plaintiffs reason that because a goal of the Ordinance is to decrease sales of dogs from puppy mills, and because local breeders may be running puppy mills and shelters may obtain dogs that originated in puppy mills, the Ordinance should apply to local breeders and animal shelters, not just pet stores.
The question, however, is whether the Ordinance "applies only to certain
Plaintiffs contend that A.R.S. § 44-1799 et seq. preempts the Ordinance. The City argues that the Ordinance is a lawful exercise of the City's authority and does not conflict with the statute. "The City of Phoenix, as authorized by the Arizona Constitution, Article 13, Section 2, has adopted a charter permitting it to enact municipal ordinances." Arizona v. McLamb, 188 Ariz. 1, 932 P.2d 266, 269 (1996). As a charter city, it "may exercise all powers granted by its charter, provided that such exercise is not inconsistent with either the constitution or general laws of the state." Jett v. City of Tucson, 180 Ariz. 115, 882 P.2d 426, 429 (1994); see also A.R.S. § 9-284(B). The City of Phoenix "is granted autonomy over matters of local interest." City of Tucson v. Arizona, 235 Ariz. 434, 333 P.3d 761, 763 (2014).
The relationship between state statutes and local ordinances has been explained as follows:
City of Tucson v. Consumers For Retail Choice Sponsored by Wal-Mart, 197 Ariz. 600, 5 P.3d 934, 936-37 (2000) (quotation marks and citations omitted). An ordinance may also be invalid if it enters a field occupied by the state. Id. at 937. But "to find preemption through state occupation of the field, `[t]he existence of a preempting policy must be clear. Also, the assertedly competing provisions in question must be actually conflicting rather than capable of peaceful coexistence.'" Union Transportes de Nogales v. City of Nogales, 195 Ariz. 166, 985 P.2d 1025, 1030
Assuming that the regulation of pet stores involves a matter of statewide concern, the Court can discern no conflict between the Ordinance and A.R.S. § 44-1799 et seq. The Ordinance prohibits pet stores from selling animals obtained from commercial breeders. The statute also regulates pet stores, which are defined as "commercial establishment[s] that engage[] in a for-profit business of selling at retail cats, dogs or other animals[.]" Id. § 44-1799. The statute requires pet stores to provide adequate housing, food, space, and veterinary care for their animals. Id. § 44-1799.04. The statute also requires a pet store to refund the cost of a pet if a veterinarian, within a certain amount of time, certifies that the animal was ill when sold. Id., § 44-1799.05. The state may assess penalties against a store for violating the statute. Id. § 44-1799.08.
The statute and Ordinance certainly regulate the same subject, but "[m]ere commonality" of subject matter does not create a conflict. Consumers For Retail Choice, 5 P.3d at 937. "[A] conflict exists only where a statute and ordinance are mutually exclusive, so that compliance with both is impossible." Wonders v. Pima Cnty., 207 Ariz. 576, 89 P.3d 810, 813 (2004). Here, compliance with both is not impossible. Under the Ordinance, a pet store is unable to purchase animals from commercial breeders for resale, but it may nonetheless comply with the statute by ensuring the health of the animals it acquires from shelters and humane societies. Plaintiffs argue that the statute specifically authorizes the sale of animals bred by USDA-licensed breeders. The Court does not agree. The statute simply requires a pet store to give certain information to a customer "if the animal is from a source that is licensed by the [USDA]." A.R.S. § 44-1799.02 (emphasis added). There being no conflict between the Ordinance and statute, Plaintiffs' preemption claim fails as a matter of law.
Puppies `N Love appears to be an exemplary pet store. The store avoids buying from puppy mills and works hard to ensure that its puppies have been raised in a humane and caring environment. No doubt, the burden of the Ordinance will fall hard on the Puppies `N Love store in Phoenix. But the Court's place is not to judge the wisdom or fairness of the City's decision to pass the Ordinance. Rather, the Court may judge only whether the Ordinance conflicts with the constitutional provisions Plaintiffs have cited. There being no conflict between the Ordinance and the United States and Arizona Constitutions, the Court must uphold the Ordinance and grant summary judgment for