UPDATES & ANALYSIS

Ninth Circuit says that Iowa and other states cannot sue California over henhouse rules

by Rox Laird | November 21, 2016

A federal appeals court last week tossed out a lawsuit by Iowa and five other states claiming California’s restrictions on egg producers violate the Commerce Clause to the U.S. Constitution and harm egg producers and consumers.

It is not necessarily the end of the road in federal court, however, as the court left the door open to similar suits in the future.

California voters in 2010 approved Proposition 2 barring California egg producers from confining hens the majority of any day “in a manner that prevents [them] from: (a) lying down, standing up, and fully extending [their] limbs; and (b) turning around freely.”

Because of concerns the regulation would put California at a competitive disadvantage, the state legislature subsequently barred the sale in the state of shell eggs that are not produced in compliance with the Proposition 2 regulations.

The states of Missouri, Nebraska, Oklahoma, Alabama, Kentucky and Iowa that sued California over the regulations are among the largest egg producing states in the nation, with Iowa being No. 1. They argue the regulations will force egg producers to retrofit hen houses at great expense or to abandon the California market.

The U.S. District Court for the Eastern District of California dismissed the suit, and that ruling was upheld last week by a three-judge panel of the San Francisco-based U.S. Court of Appeals for the Ninth Circuit.

The panel held that the states did not have standing to sue under the principle of parens patriae, that is a suit brought by a state on behalf of its people. To establish standing in such cases, the state must show that it has an interest apart from the interests of particular private parties.

In this situation, the Court said, “relief would be available to the egg farmers themselves, were they to file a complaint on their own behalf.”

The Court also rejected the states’ argument as speculative that California’s regulations would affect consumers through egg prices. It noted that the states argued that the regulations could increase egg prices to cover increased operating costs along through higher prices, or lower prices if there is a surplus of eggs should producers abandoned the California market.

The Court said the case should be dismissed without prejudice, however, meaning a suit against California could be revived in the future. It likely would have to be brought by egg producers, though, not the states.