[00:00:41] Speaker 03:
Is that, would that be you?

[00:00:44] Speaker 03:
Okay, you're going first, right?

[00:01:15] Speaker 05:
for a bottle.

[00:01:17] Speaker 05:
The dormant commerce clause exists to prevent states from enacting discriminatory regulations, ensuring that states do not use access to their economic markets in an attempt to dictate policy nationwide, thereby preventing trade wars among the states.

[00:01:33] Speaker 05:
In National Pork Producers versus Ross, the Supreme Court can

[00:01:45] Speaker 05:
Commerce Clause jurisprudence.

[00:01:47] Speaker 05:
And although the court's opinion in Ross fractured in some respects, the court was crystal clear unanimously that discriminatory laws fail under the Dormant Commerce Clause.

[00:01:59] Speaker 05:
So I think there are three grounds on which it's discriminatory.

[00:02:04] Speaker 05:
The first is that it imposes requirements nationwide that California had previously imposed just on

[00:02:25] Speaker 05:
That's correct.

[00:02:27] Speaker 05:
It prohibits the cells in the state of California if the breathing cells are not housed in a manner consistent with that.

[00:02:35] Speaker 01:
So this is sort of a preliminary question I have about the entirety of your brief.

[00:02:39] Speaker 01:
It seems to treat Prop 2 as Phase 1 and Prop 12 as Phase 2.

[00:02:45] Speaker 01:
Right.

[00:02:45] Speaker 01:
If Prop 2 had never happened, would you still

[00:02:52] Speaker 05:
So, yes, but I think the argument would be slightly different, right?

[00:02:57] Speaker 01:
It would have to be very different, because I read your brief is relying heavily on Prop 2, as opposed to what you say is a disadvantage for the California producers.

[00:03:09] Speaker 01:
That's correct.

[00:03:10] Speaker 01:
And you are really, if they've been unsatisfied with that, they need to

[00:03:25] Speaker 05:
Discrimination argument, yes, I think that Prop 2 is very significant here.

[00:03:30] Speaker 05:
Now, I think if you look, let's just say we were starting Clark Watch, as you said, and we were in a situation where you're just enacting Prop 12 standalone by itself.

[00:03:40] Speaker 05:
I still do think arguments under Pike versus Bruce Church, and I also think you would have to look at the discriminatory impact if there was one, given the relative size of the markets.

[00:03:54] Speaker 05:
I do think yes, it's a very different scenario though.

[00:03:58] Speaker 03:
Well, I guess there's a lot of arguments.

[00:04:02] Speaker 03:
I'm sure there's people in California, there are farmers in California that don't like this law because it's difficult for them.

[00:04:13] Speaker 03:
So when I look at the discriminatory nature of it,

[00:04:17] Speaker 03:
They're making people in California do what they're telling everyone else to do.

[00:04:22] Speaker 03:
And that's where I have difficulty seeing.

[00:04:25] Speaker 03:
Let's say Prop 12 said in its preamble or something like that, California has decided for the whole world how animals should be treated.

[00:04:35] Speaker 03:
And we don't care if it costs you more money.

[00:04:39] Speaker 03:
We don't care about that.

[00:04:40] Speaker 03:
We think that everyone needs to treat pigs in a certain way.

[00:04:44] Speaker 03:
And they have to have turnarounds.

[00:04:45] Speaker 03:
They have to have all of this.

[00:04:48] Speaker 03:
it on the entire world.

[00:04:50] Speaker ?:
Well, the last case said they can go extraterritorial.

[00:04:55] Speaker 03:
So why is this more burdensome on what I'm having a hard time finding it being discriminatory on its face?

[00:05:02] Speaker 05:
So I first let me just push back a little bit on the nomenclature on its face.

[00:05:08] Speaker 05:
I mean, I think I think you're right that it textually it has the same requirement for in state is out of state.

[00:05:19] Speaker 03:
We accept, you accept that at this point?

[00:05:21] Speaker 05:
Well, that it's not per se unconstitutional if they go extraterritorial.

[00:05:26] Speaker 05:
It's still relevant to the analysis that it's extraterritorial, but I, I, there's not a prohibition.

[00:05:32] Speaker 05:
That's what was argued in Ross, and we don't- Finding authority.

[00:05:36] Speaker 01:
We have a case law from the Ninth Circuit, case law from the Ninth Circuit, right, to that effect, and now the, affirmed by the United States Supreme Court that there's not an extraterritorial application that violates the Dormant Commerce Clause.

[00:05:45] Speaker 05:
It doesn't automatically violate the Dormant Commerce Clause.

[00:06:09] Speaker 05:
all of the farmers in California that did go through that process and did make the changes.

[00:06:14] Speaker 05:
And then it's being imposed on extra-territorially on farmers outside of the state as well.

[00:06:19] Speaker 03:
You've got six years and you've got six weeks.

[00:06:21] Speaker 05:
Correct.

[00:06:22] Speaker 05:
And so it's both, one, the time differential, and that's a significant component of it.

[00:06:29] Speaker 05:
But secondly, it's the leveling effect that's created, and that's what Judge Christian was mentioning as well.

[00:06:40] Speaker 01:
Because Prop 2 talked about that applied to how one houses, keeps livestock within the state of California.

[00:06:49] Speaker 01:
Now we're talking about Prop 12, and that was enacted at the same time, much more rapidly, but setting aside that the regulations took years to develop.

[00:06:59] Speaker 01:
But setting that aside for the moment, that was enacted across the board in the same way it didn't disfavor the state.

[00:07:08] Speaker 05:
Well, it does, though, because the in-state farmers are already compliant.

[00:07:13] Speaker 01:
So an out-of-state farmer... Or if they've chosen to get out of the market.

[00:07:17] Speaker 01:
We don't know that.

[00:07:19] Speaker ?:
But, right?

[00:07:20] Speaker 05:
Well, I mean, I suppose that's true, that all of the in-state California farmers, there was certainly no evidence to that effect in the record.

[00:07:48] Speaker 06:
litigation process.

[00:07:49] Speaker 06:
I have a sort of technical question that follows up on one question that Judge Christin asked.

[00:07:55] Speaker 06:
In your view, is there any part of Judge Ikuta's opinion that is not binding on us?

[00:08:06] Speaker 05:
So, I don't think so.

[00:08:10] Speaker 05:
No, I think it would be binding, although the claims

[00:08:26] Speaker 06:
that is binding on us as a three-judge panel.

[00:08:41] Speaker 05:
there could be an argument there.

[00:08:43] Speaker 05:
I don't think there's anything material to our position today that would require anything like that.

[00:08:48] Speaker 05:
I think the main distinction to draw with Judge Akuta's opinion, with the Supreme Court's opinion, is that the claims are different.

[00:08:53] Speaker 05:
We're not making a sort of an express, per se, unconstitutionality argument.

[00:08:59] Speaker 05:
It's a discrimination argument.

[00:09:01] Speaker 01:
Could we get back to your answer that you've tried so hard to get to, but we keep this leading us straight.

[00:09:06] Speaker 01:
Your strongest argument that this is discriminatory is what?

[00:09:09] Speaker 05:
So I think it's Prop 2 and the leveling effect.

[00:09:15] Speaker 05:
So I think there's two aspects of Prop 2.

[00:09:16] Speaker 05:
First, it's the leveling aspect that it imposes.

[00:09:20] Speaker 05:
So it took an advantageous market position that out-of-state farmers had and made that less advantageous by imposing regulations that conditioned access to California's market on compliance with these regulations.

[00:09:42] Speaker 05:
the Supreme Court talks about this level of effect and how it doesn't necessarily

[00:09:56] Speaker 05:
state, that leveling effect affords a discrimination argument.

[00:10:02] Speaker 05:
So the second would be the time differential, right?

[00:10:06] Speaker 05:
The lead time differential that they had to come into compliance with these.

[00:10:10] Speaker 05:
And I think that's especially critical here.

[00:10:13] Speaker 01:
There's also, forgive me for interrupting, but to make sure we're communicating clearly, the time differential is only a function of if you treat, of treating Prop 2 as Phase 1, right?

[00:10:23] Speaker 01:
Yes.

[00:10:30] Speaker 05:
And I think that's especially significant here when you look at the size differential

[00:11:35] Speaker 05:
we think that should be reversed, because we do have at least a fair chance of prevailing on these discrimination arguments, especially now that the Supreme Court has decided Ross.

[00:11:45] Speaker 03:
But we could technically say they didn't abuse the expression, but your complaint says enough.

[00:11:50] Speaker 05:
The state's a claim, and we think that's certainly the case, especially after Ross.

[00:12:09] Speaker 05:
So, um, I think there's a point to be made on Exxon that I think also applies to the elevator, the Foie Gras case out of the ninth circuit.

[00:12:26] Speaker 05:
discrimination aspect to it, right?

[00:12:28] Speaker 05:
So it's fundamentally apples and oranges.

[00:12:31] Speaker 05:
It's a different circumstance here where you do have in-state providers in this circumstance that, as we've put it, have an advantage, unfairly so, as compared to out-of-state providers.

[00:12:54] Speaker 06:
as opposed to purveyors.

[00:12:56] Speaker 00:
Yes, that's correct.

[00:12:57] Speaker 06:
I apologize.

[00:12:58] Speaker 05:
I mean, that would have to be your argument.

[00:13:02] Speaker 05:
That's right.

[00:13:03] Speaker 05:
That's right.

[00:13:03] Speaker 05:
And fundamentally, I mean, whether, you know, and again, we have to remember that this statute is passed based on a subjective moral sense

[00:13:25] Speaker 01:
have two purposes and I don't think your blue briefing gauges in the same

[00:13:51] Speaker 05:
Let me talk about the second for just a moment.

[00:14:19] Speaker 05:
It admits that there's no scientific evidence whatsoever on the food safety point.

[00:14:25] Speaker 05:
And so there was none presented in the record whatsoever.

[00:14:29] Speaker 05:
So it's not just what the state says.

[00:14:32] Speaker 05:
It's got to establish it now that we're at a preliminary injunction phase, and they failed to do so.

[00:14:37] Speaker 05:
And so we're left with, and I believe that the state's brief admits or comes

[00:14:44] Speaker 05:
They're relying just on the animal welfare component of this.

[00:14:47] Speaker 05:
And I do think that's significant when we come back to this trade war point, right?

[00:14:53] Speaker 05:
Because if we're going to allow statutes to be passed extraterritorially based on that subjective sense, then it's products produced based on minimum wage or immigration status or access to health care or whatever the hot button social issue is for the day, all of a sudden becomes the basis for economic protectionism type statutes.

[00:15:16] Speaker 05:
to me wouldn't have any local impact benefit that they would be allowed to weigh against.

[00:15:26] Speaker 05:
But the local benefit here, as I understand it, is citizens of California saying, we don't want to eat pork that was raised in a certain manner.

[00:15:33] Speaker 05:
That's our subjective sense.

[00:15:36] Speaker 05:
Just like it would be, we don't want to buy products that are made with labor that wasn't paid at a level that we find acceptable.

[00:15:47] Speaker 01:
I took issue with because I couldn't imagine frankly a local benefit to California imposing such a statute, a hypothetical one that said we're not going to import anything if the minimum

[00:16:07] Speaker 01:
for that reason.

[00:16:08] Speaker 01:
And this one, although you're describing it as valulatant maybe, I do think there were two different purposes that were described.

[00:16:15] Speaker 01:
But it's still under pike.

[00:16:16] Speaker ?:
We're still going to have to do that balancing.

[00:16:18] Speaker 05:
Three members of the court didn't think they could.

[00:16:21] Speaker 05:
So yeah, and if I may answer this question.

[00:16:24] Speaker 05:
And that loops back to Judge Callahan's point that she made with respect to Judge Akuta's opinion.

[00:16:30] Speaker 05:
When we're talking about the different interests that are the different burdens

[00:16:39] Speaker 05:
as compliance costs that were asserted here.

[00:16:45] Speaker 05:
a preliminary injunction record, including negative health consequences for the pigs and the sows themselves, worker safety risks, the risk of having to cull the breeding herds to make sufficient space, the disruption of the nationwide pork market, which was not at issue there either.

[00:17:03] Speaker 05:
So those far beyond in our complaint, far beyond just the compliance crossed with the statute.

[00:17:09] Speaker 05:
So those are the interests that are weighed here in our field.

[00:17:12] Speaker 03:
So you have some language, I think, that you put

[00:17:34] Speaker 05:
something specific.

[00:18:04] Speaker 05:
So paragraph 213, there's some regulatory text that says this proposal does not directly impact human health and welfare of California residents, worker safety, or the state's environment.

[00:18:18] Speaker 05:
Perhaps that's what the quarter's referring to, and that's one instance where we did use language from the state.

[00:18:41] Speaker 05:
Um, so I think that your honor is correct as you previously articulated that there is no longer an express per se unconstitutionality argument with respect to extraterritorial jurisdiction.

[00:18:56] Speaker 05:
I don't think this case presents that question.

[00:18:58] Speaker 05:
So I don't think there's really much to do on that point with respect to

[00:19:17] Speaker 05:
five times in his majority opinion, that that argument was not made, was not raised, and was conceded that it was not raised there.

[00:19:24] Speaker 05:
So as to the discrimination point, I think you're riding on new territory there.

[00:19:29] Speaker 05:
With respect to the Pike claim, I think that goes back to my last answer, that I do think the court has to take into consideration what the Supreme Court said and what judges said.

[00:19:38] Speaker 03:
What did they say on substantial burden?

[00:19:40] Speaker 03:
So it is the holding, because you've got things that Barron says you've got to do.

[00:19:54] Speaker 05:
Right there, when you said six justices, that means you're looking to justices in the dissent.

[00:20:02] Speaker 05:
Part concurrence and part dissent.

[00:20:04] Speaker 01:
So does our case allow us to do that under Marx?

[00:20:08] Speaker 05:
So, I mean, I think it gets difficult to decide what to do with, because then you don't have a majority opinion on hikes, right?

[00:20:53] Speaker 06:
in the judgment, correct?

[00:20:55] Speaker 05:
I would have to go back and look at that.

[00:20:56] Speaker 05:
I'm not sure.

[00:20:58] Speaker 05:
I don't know, because there were several of the opinions that were listed as both concurrences and decides.

[00:21:06] Speaker 06:
I think though they concurred in parts of the majority, but the judgment was affirmed.

[00:21:13] Speaker 05:
Right.

[00:21:14] Speaker 05:
That's right.

[00:21:14] Speaker 05:
And so if we're in that posture, let's just posit that that's, and again, I'll

[00:21:30] Speaker 05:
And what Judge Acuted did on Pike is characterize all of these costs as compliance costs and held all the costs that were asserted there as compliance costs and held that those were not sufficient to create a substantial burden.

[00:22:12] Speaker 05:
disruption of the interstate market I mean I think that's what this case turns on not the prop 12 is outside the heartland that the argument advanced in Ross was outside the

[00:22:39] Speaker 01:
I'd certainly give you that.

[00:22:41] Speaker 05:
Right.

[00:22:41] Speaker 05:
Which is why we've been thrilling you on that.

[00:22:43] Speaker 05:
And that is the heartland.

[00:22:44] Speaker 05:
I guess that's my point, is that what was outside the heartland was the claim that was

[00:23:23] Speaker 00:
within the state and out of the state had to comply with.

[00:23:26] Speaker 05:
So whether it's, quote unquote, phase one or phase two, whether you look at it that way or you just look at the market as it existed before Prop 12 was initiated, you still have that discriminatory impact there.

[00:23:42] Speaker 05:
I appreciate your response and your advocacy.

[00:23:43] Speaker 05:
I think we're just trying to figure out the end to which we're bound.

[00:23:45] Speaker 05:
I understand that.

[00:23:55] Speaker 05:
And I think those are the allegations that we're lacking in RAS that we're certainly not lacking here.

[00:24:03] Speaker 05:
And I believe it's primarily Dr. Tonzer's declaration that's included in the excerpts of record that goes in great detail about the interconnectedness of the supply chains of the national pork market and how this law disrupts that on a national scale.

[00:24:20] Speaker 03:
Okay.

[00:24:26] Speaker 03:
Okay.

[00:24:28] Speaker 03:
I appreciate it, Your Honor.

[00:24:30] Speaker 03:
Yes, we're keeping, we just want to have our questions answered.

[00:24:33] Speaker 03:
Understood.

[00:24:33] Speaker 03:
And get the issues framed.

[00:24:36] Speaker 03:
Happy to do whatever the court wants.

[00:24:37] Speaker 03:
Okay, thank you.

[00:24:38] Speaker 03:
Thank you, Your Honor.

[00:24:40] Speaker 03:
All right.

[00:24:44] Speaker 02:
Good morning.

[00:24:45] Speaker 02:
Good morning, Your Honor.

[00:24:47] Speaker 02:
Kristen Liske on behalf of the State Department, or State Defendants, and may it please the Court.

[00:24:57] Speaker 02:
both in their briefing and here about the preliminary injunction and what's in the declarations.

[00:25:04] Speaker 02:
I want to just sort of affirm that the question that we really think is the starting place and ending point is the propriety of the grant of dismissal on the motion to dismiss.

[00:25:12] Speaker 01:
It's sort of tricky, though, because otherwise we would be talking about whether an amendment would be futile.

[00:25:17] Speaker 01:
And so, right, it's in the preliminary injunction context that we see the declarations and we could see really what's

[00:25:28] Speaker 02:
I just had the opportunity to admit and how they felt like bringing in the things said in those declarations into a complaint would have suffice to get past the motion to dismiss hurdle.

[00:25:37] Speaker 02:
They had that opportunity.

[00:25:58] Speaker 03:
Do we have the authority to say we think it could be amended?

[00:26:09] Speaker 03:
from us.

[00:26:10] Speaker 02:
I am not sure as a legal matter, I think as an equitable matter, the fact that plaintiffs had the opportunity to take a second bite at the apple and chose to appeal, including, you know, they very well could have, this case was stayed during the pendency of the national court decision, and plaintiffs then could very well have come in after national court ruled and requested to, you know, dismiss the appeal perhaps

[00:26:32] Speaker 02:
I think we might have been a minimal to those discussions, but they chose to continue forward with this appeal even after having denied the right to leave to amend and having denied desire to sort of recalibrate any sort of strategies in light of national pork.

[00:26:48] Speaker 02:
So I think at this point, equitably speaking,

[00:27:02] Speaker 03:
then there's in effect right so what would it what would one look like on its face give me a hypothetical statute that how California what could California do that would be discriminatory on its face I think a classic example are some of the cases discussed in national pork like Baldwin where you have price fixing statutes so a statute that said that no pork producer may sell to a

[00:27:34] Speaker 02:
you could make a good argument that there'd be a discriminatory situation if you have a statute that says something like no one may sell pork in California unless that pork was fed by feed that came from a California farm.

[00:27:45] Speaker 02:
That would look like a discriminatory statute as well in that we've specified only

[00:28:07] Speaker 02:
But I think it's helpful to take a step back and look at what really we're talking about when we look at discrimination for purposes of the dormant commerce clause.

[00:28:15] Speaker 02:
It's not simply that there is some sort of disparate impact existing or a difference in how burdens allocated between out-of-state versus in-state producers.

[00:28:24] Speaker 02:
I think Exxon is quite clear that even if the entirety of a burden falls on out-of-state commerce or out-of-state

[00:28:36] Speaker 02:
the heartland of the Dormant Commerce Clause is not so much discrimination as it is economic protectionism.

[00:28:42] Speaker 02:
The question is, is there discrimination going on that is about economic protectionism?

[00:28:47] Speaker 01:
There's going to be winners and losers in terms of, in Exxon they talked about different firms are going to be winners or losers, but what we're interested in is protecting the market.

[00:28:56] Speaker 02:
Correct, and I think that that's exactly that the Exxon winners and losers different firms

[00:29:04] Speaker 02:
that plaintiffs do state in their complaint that a small number of producers, I want to say about 4%, already met

[00:30:11] Speaker 02:
So so the hypothetical proposition 12 was a restriction on.

[00:30:31] Speaker 02:
issue in the way that plaintiffs are looking at that.

[00:30:33] Speaker 02:
There may be, and I don't want to concede anything, but likely would be some extra territoriality problem if California said to Iowa pork producers, if you don't confine your pigs with 24 square feet, we're going to come and find you for that conduct alone because we can't, you know,

[00:31:09] Speaker 02:
I think that that would make for a closer question.

[00:31:13] Speaker 02:
I think that if you had a sales restriction on California producers only and then a sales restriction on out-of-state sellers, I mean in this case it would be more like sellers, that would create a closer question because in that case you would have a better argument that the state gave more time to an industry.

[00:31:42] Speaker 02:
on how pigs are raised and a sales restriction.

[00:31:45] Speaker 03:
So can California dictate what the rest of the world has to do?

[00:31:49] Speaker 03:
And is that what California is doing here?

[00:31:52] Speaker 03:
California, concerning California, kind of thinks it's its own nation.

[00:31:55] Speaker 01:
Let's put it that way.

[00:31:57] Speaker 01:
One of the three of us who lives in California, I'd like to point out, and two of us are here from Hawaii and Alaska.

[00:32:16] Speaker 02:
I'll start first with that second part of your question, then turn to the first.

[00:32:20] Speaker 02:
The proposition identifies two main purposes, which is partly the ethical concerns.

[00:32:25] Speaker 02:
I think this large part of it, the California voters finding certain ways of raising animals to be cruel and inhumane and wanting to rid inhumane products from their market.

[00:32:35] Speaker 02:
Part of it is the public health and safety

[00:32:38] Speaker 02:
have not disclaimed or disavowed those as a benefit of this statute.

[00:32:44] Speaker 02:
But I think that California has the right to determine what products are sold within its marketplaces within the borders of its states and that that may have a larger small impact on the rest of the country or on how other businesses choose to do business is the practical reality of living

[00:33:01] Speaker 02:
In a country with 50 states, the states get to decide what they want sold.

[00:33:05] Speaker 02:
They can decide we don't want products we view as inhumane.

[00:33:08] Speaker 02:
They can say we don't want products we have concerns about health risks from.

[00:33:14] Speaker 02:
And to the extent that there is a concern that this is disrupting things too much, this is problematic, Congress has a power under the affirmative commerce clause.

[00:33:23] Speaker 02:
It can go in and it can set standards for the nation.

[00:33:26] Speaker 02:
It can preempt and displace California's laws if it deems it truly necessary to have a uniform market on this.

[00:33:32] Speaker 01:
How would we conduct the balancing just under Pike?

[00:33:35] Speaker 01:
Three members of the United States Supreme Court thought it couldn't be done for this kind of a local benefit.

[00:33:48] Speaker 02:
We just cannot establish or allegations to show a substantial burden under interstate commerce.

[00:33:54] Speaker 02:
We don't even get to the benefits.

[00:33:56] Speaker 02:
The second part is that the question is whether or not the bargain is clearly excessive compared to the local benefits.

[00:34:02] Speaker 02:
And I think, you know, particularly given the concerns about how do you measure dollars versus

[00:34:12] Speaker 02:
that way here even if we get through the substantial burden, which for reasons raised by this court under the national court decisions, both the plurality and this court's decision, plaintiffs have not sufficiently alleged.

[00:34:26] Speaker 02:
What would give me an example of what would allege that?

[00:34:31] Speaker 02:
There are the cases involving instrumentality.

[00:34:36] Speaker 02:
I think there's the mud flaps and the lengths of trains.

[00:34:40] Speaker 02:
A situation as in Pike where you have what looks to be a smoke screen for economic protectionism would be a situation where you have that.

[00:34:51] Speaker 02:
I see that I'm out of time.

[00:35:00] Speaker 02:
you could imagine a hypothetical where the argument is that the burdens imposed on interstate commerce itself, so not necessarily just on certain producers, would eradicate a market for a product entirely.

[00:35:11] Speaker 02:
There would never be any pork sold anywhere in this country ever again, maybe then.

[00:35:16] Speaker 02:
But we're clearly far from that sort of hypothetical situation here.

[00:35:32] Speaker 02:
And that again goes back to the question of, is this really just a slightly.

[00:35:36] Speaker 02:
So, first, I think we agree with just Christian that this is a Apple soreness comparison because we're looking at a direct regulation of conduct versus a sale.

[00:35:50] Speaker 02:
raise pigs, but do sell pork that face the same timelines of compliance that both Iowa out-of-state businesses do and the in-state businesses do.

[00:35:59] Speaker 02:
Albertsons, for instance, does not raise pork, but does certainly sell it.

[00:36:05] Speaker 02:
So we don't think the comparison is apposite.

[00:36:07] Speaker 02:
And then the second point is that to the extent that there might be some difference, maybe out-of-state market was not as well positioned to respond.

[00:36:15] Speaker 02:
The question is discrimination for purposes of economic protectionism.

[00:36:18] Speaker 02:
And there's nothing here that at all indicates Proposition 12's point was to protect in-state pork producers at the expense of out-of-state businesses.

[00:36:27] Speaker 01:
He argues that's the effect.

[00:36:29] Speaker 01:
That's what he's arguing.

[00:36:30] Speaker 01:
Because he defines the market as post

[00:36:38] Speaker 02:
I really think that what the courts are looking at, if you look to the national pork discussion of cases like Baldwin, Brown, and Healy, they're really talking about situations where you're disrupting

[00:36:59] Speaker 02:
they naturally have.

[00:37:01] Speaker 02:
And that's really just not what is going on here.

[00:37:03] Speaker 02:
This law is not about protecting California's pork industry.

[00:37:07] Speaker 02:
It's about eliminating cruelty and humane products.

[00:37:09] Speaker 02:
It's about public health and safety.

[00:37:11] Speaker 03:
The voters knew.

[00:37:13] Speaker 03:
But I think the district court relied on Elavirus and Exxon and what they're saying is in Elavirus and Exxon they're

[00:37:35] Speaker 03:
So, isn't that circumstance categorically different than what's in alibis and exon?

[00:37:48] Speaker 02:
The salience is really, are we trying to allocate burdens in a way that's designed to protect our in-state market and proposition 12, which to be clear, further imposes even more restrictions on the conduct of in-states pig farmers.

[00:38:09] Speaker 02:
included in proposition two.

[00:38:11] Speaker 02:
It would be sort of anomalous to impose further restrictions on your local industry in an attempt to protect it from competition from outside.

[00:38:23] Speaker 02:
So we would request the court affirm, unless you have any further questions.

[00:38:26] Speaker 02:
Thank you for the additional time.

[00:38:28] Speaker 03:
Thank you.

[00:38:29] Speaker 03:
Thank you.

[00:38:30] Speaker 03:
All right, we'll hear from Humane Society.

[00:38:33] Speaker 03:
We have five minutes.

[00:38:39] Speaker 04:
Thank you, Your Honor.

[00:38:40] Speaker 04:
May it please the court, Ralph Henry, on behalf of the intervener, defendants, and proponents of this measure, with my short time here today.

[00:39:25] Speaker 04:
producers prior to enactment of Proposition 12, that was an unearned advantage.

[00:39:31] Speaker 04:
So the citation to the Hunt Apples case, which is about an earned advantage that industry had by virtue of having higher quality apples, which was negated by the regulatory provision enacted in North Carolina, is not on point.

[00:39:44] Speaker 04:
In fact, this Court's Rocky Mountain

[00:40:06] Speaker 04:
I'm going to get there and I'm not going to concede that what I'm about to say would be a discriminatory law.

[00:40:11] Speaker 04:
However, this is not the case where California came along and gave subsidies to in-state producers to change their production practices and then didn't offer those subsidies to out-of-state producers who were accessing the California market by supplying pork.

[00:40:41] Speaker 04:
where they try to convert obligation into opportunity and burden into benefit.

[00:40:47] Speaker 04:
I'd also like to make two other points with regard to the state's discriminatory burden argument, the lead time argument.

[00:40:56] Speaker 04:
The first is that, as Judge Christin mentioned, it is a discriminatory effects argument.

[00:41:02] Speaker 04:
There's no credible allegation that there's a discriminatory purpose here, in our view, and as we briefed it.

[00:41:08] Speaker 04:
And as a discriminatory effects claim, they can't make it.

[00:41:22] Speaker 04:
be time advantages, which I would summarize as we plaintiffs members out of state producers were not given as much time to be prepared for the initial implementation of Proposition 12 as in state producers had by virtue of the obligations of Proposition 2.

[00:41:38] Speaker 04:
They never once in the complaint actually alleged an actual protection is

[00:41:59] Speaker 01:
when we look at the 12b6 motion?

[00:42:01] Speaker 04:
No, I don't think so, Your Honor.

[00:42:03] Speaker 04:
Because they did not amend?

[00:42:05] Speaker 04:
Well, not just because they did not amend, but because they're outside of the complaints.

[00:42:08] Speaker 04:
Well, that's my point.

[00:42:10] Speaker 04:
I mean, if we're going to go there, what's good for the goose is good for the gander.

[00:42:13] Speaker 04:
I mean, we submitted a declaration by a noted University of Texas economist and studies industry, Dr. Debra McKeezler.

[00:42:21] Speaker 04:
And it's cited.

[00:42:24] Speaker 04:
Oh, I have to get that cited.

[00:42:27] Speaker 04:
It's in our brief.

[00:42:40] Speaker 04:
that there are reasons to question the accuracy

[00:43:24] Speaker 04:
effects.

[00:43:26] Speaker 04:
This court in Exxon, which has been mentioned for lots of other purposes, specifically indicated that the hallmark of discriminatory effects is a shift causing local goods to constitute a larger share of the market than out-of-state goods.

[00:43:40] Speaker 04:
And they theoretically could have alleged that if it had been true, but they haven't.

[00:43:44] Speaker 04:
They could have, but they didn't.

[00:43:46] Speaker 04:
And the last thing I'll say about the discriminatory effects argument is one that is not fully fleshed out

[00:43:59] Speaker 04:
One about the times preparedness of in-state versus out-of-state entities for implementation of Proposition 12.

[00:44:09] Speaker 04:
And when federal courts remedy constitutional violations by state laws, federal courts do not throw the baby out with the bathwater.

[00:44:20] Speaker 04:
Every time there's a constitutional violation, which, again, we don't concede there is, you don't throw out the entirety of the statute, you don't enjoin the entirety of the statute indefinitely, and so the type of court orders

[00:44:36] Speaker 04:
for a period of time that would allow plaintiffs' members to come into compliance, at which point, whatever disparity they imagine between in-state, down-state producers to get ready for this law will have disappeared.

[00:44:46] Speaker 04:
That would satisfy the constitutional concern.

[00:44:49] Speaker 04:
And what do we know?

[00:44:50] Speaker 04:
It's 2024.

[00:44:51] Speaker 04:
This law was enacted in 2018.

[00:44:53] Speaker 04:
It's been five and a half years, and the law has not been enforced against anybody.

[00:44:57] Speaker 04:
My clients call me all the time, and they say, when is California going to be done selling cruel and unsafe pork?

[00:45:04] Speaker 04:
We now have five and a half years.

[00:45:51] Speaker 05:
Unfortunately, it's just not quite that simple because we have it seems that the silver bullet argument here appears to be Because we enacted it as a sales ban that's sufficient to get around constitutional scrutiny But we know that that's not true because if you look at even the even the milk pricing the milk pricing cases But certainly hunt versus Washington Apple growers in those cases those right actions

[00:46:24] Speaker 05:
That's a sales ban within the state, yet it fails under the Dormant Commerce Clause.

[00:46:31] Speaker 05:
And we know this has to be true, that a sales ban can't insulate it from constitutional protection.

[00:46:37] Speaker 05:
I mean, take the hypothetical where the state of California says,

[00:46:46] Speaker 05:
no problem concluding that that's discriminatory under the Commerce Clause, yet it's phrased as a sales ban.

[00:46:52] Speaker 05:
So it can't simply be that we say it's a sales ban within the state and that passes constitutional muster.

[00:46:59] Speaker 05:
We have to look further into what the realities and the effects are of what happens with the specific statute that's enacted.

[00:47:07] Speaker 05:
The second point, the state talks about protectionism and about how it

[00:47:14] Speaker 05:
unless there's a protectionist intent.

[00:47:17] Speaker 05:
And I would draw the court's attention to paragraph 210 in the complaint where we quote specifically from some of the regulatory text implementing Proposition 12 that indicates that in-state farms are going to find it more costly to compete with out-of-state farms unless we have the sales

[00:47:45] Speaker 05:
and what the actual effects of this were, fine.

[00:47:50] Speaker 05:
But for purpose, certainly for purposes of the 12b6 point, we stated a claim here, and the court should at least remain on that point.

[00:47:58] Speaker 03:
What about the six years since it's been five and a half?

[00:48:01] Speaker 03:
Well, and how, let's just say that's where I am, and that's what my, that, sure, I think that that's what the issue was.

[00:48:10] Speaker 03:
Sounds kind of futile now.

[00:48:18] Speaker 05:
an act or enforcement of the statute was stayed either by a judicial order or by agreement of the state of California while we were disentangling the Ross litigation, right?

[00:48:30] Speaker 05:
And so now we're back here drawing on a clean slate.

[00:48:34] Speaker 03:
You're saying you didn't do anything because you didn't have to, and now if you have to, then you want six years.

[00:48:39] Speaker 05:
Well, or at least to litigate the issue of what's the appropriate remedy in that circumstance.

[00:48:46] Speaker 05:
And remember, too,

[00:48:50] Speaker 05:
about how they can self-work in the interim period, or at least in-state providers could, which is a component of the discrimination as well.

[00:48:58] Speaker 05:
That just expired eight days ago, right?

[00:49:00] Speaker 05:
So it's still timely.

[00:49:01] Speaker 05:
Do you have questions?

[00:49:04] Speaker 03:
No.

[00:49:04] Speaker 03:
So wrap it up in a minute, OK?

[00:49:05] Speaker 05:
OK.

[00:49:07] Speaker 05:
All right.

[00:49:07] Speaker 05:
The last point is Judge Callahan asked about the ability to amend how all this procedure works out with respect to the procedural posture here.

[00:49:18] Speaker ?:
We certainly believe that the right

[00:49:22] Speaker 05:
discretion on the injunction that should be enjoined now.

[00:49:25] Speaker 05:
If the court disagrees with that, at the very least under Ross and its precedents, we've stated a claim based on this complaint alone for all of the reasons that we've discussed here.

[00:49:36] Speaker 05:
Even if the court disagreed with that, I still believe you're right, Your Honor, that this court would have the ability to say, especially in light of the changed circumstances with Ross and the changed circumstances of the law, the plaintiff should be entitled to leave to amend if they so choose.

[00:49:55] Speaker 05:
this complaint's text alone, it warrants reversal, both as to the preliminary injunction and to the text of the complaint.

[00:50:03] Speaker 03:
All right.

[00:50:03] Speaker 03:
This matter will stand submitted.

[00:50:06] Speaker 03:
I want to thank all of you for excellent argument in this case.

[00:50:10] Speaker 03:
It's a difficult case.

[00:50:11] Speaker 03:
And we always appreciate when the attorneys are that well-prepared and versatile on their arguments.

[00:50:20] Speaker 03:
And we enjoy argument when