Court Opinion

ID: 4180836
Source: CourtListenerOpinion
Date Created: 2017-06-26 20:04:06.785838+00
Date Added: 2024-06-11T07:47:16.189862
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 26 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

CORE-MARK INTERNATIONAL, INC.,                  No.    15-35705

                Plaintiff-Appellant,            D.C. No. 6:15-cv-00005-SEH

 v.
                                                MEMORANDUM*
THE MONTANA BOARD OF
LIVESTOCK, in its official capacity as head
of the Montana Department of Livestock; et
al.,

                Defendants-Appellees.

                   Appeal from the United States District Court
                           for the District of Montana
                    Sam E. Haddon, District Judge, Presiding

                             Submitted June 5, 2017**
                               Seattle, Washington

Before: FERNANDEZ, CALLAHAN, and IKUTA, Circuit Judges.

      Appellant Core-Mark International, Inc. (“Core-Mark”) challenges the

district court’s dismissal of its action against Appellee Montana Board of

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Livestock (the “Board”) for lack of Article III standing. We construe a district

court’s dismissal for lack of subject matter jurisdiction as a dismissal pursuant to a

Federal Rule of Civil Procedure 12(b)(1) motion, see Chandler v. State Farm Mut.

Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010), which we review de novo, see

Wilson v. Kayo Oil Co., 563 F.3d 979, 980 (9th Cir. 2009) (per curiam). Because

we hold that Core-Mark has Article III standing to press its claims beyond the

motion to dismiss stage, we vacate the district court’s order and remand for further

proceedings.

                                          I.

      Under Montana law, milk processors, such as milk packagers,1 are

responsible for stamping milk cartons with sell-by dates. See Admin. R. Mont.

§ 32.8.203. A Montana regulation also requires that milk be stamped with a sell-

by date of no more than 12 days from the date of pasteurization (the “Single Date

Rule”), and that milk be removed from store shelves after that time (the “12 Day

Rule”). Admin. R. Mont. § 32.8.202. Failure to comply with the regulation

1
      The term “packager” is not defined under Montana law. The district court
reasonably interpreted “packager” to fall under the umbrella of the term
“producer,” which is defined as “a person who produces milk for consumption in
[Montana] and sells it to a distributor.” Mont. Code Ann. § 81-23-101(j). Core-
Mark also refers to a “processor” as one who pasteurizes, homogenizes, and
packages milk. We treat the term “processor” as being synonymous with the terms
“producer” and “packager”.

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exposes processors, distributors, and retailers alike to criminal penalties. Mont.

Code Ann. § 81-23-405.

      Core-Mark is a Washington State-based milk distributor that purchases milk

from processors and then delivers its product to independent grocery stores in

Montana and other states. For several years, Core-Mark enjoyed an exemption to

the Single Date Rule that allowed it to distribute milk cartons labeled with two

dates: the 12-day date required under Montana law and the date reflecting the

actual shelf life applicable in other Northwest states. However, in 2008, the

Montana Department of Livestock2 (“Department”) rescinded the so-called Dual

Date Exemption, causing Core-Mark to file suit in federal court challenging the

constitutionality of the regulation.

      Core-Mark dismissed its first federal suit in favor of an administrative

proceeding, and then pressed its grievances in state court. After those efforts

curdled, Core-Mark refreshed its claims in federal court, alleging in the district

court that the Montana regulation violated (i) the equal protection and due process

clauses of the Fourteenth Amendment, (ii) the commerce clause, (iii) the privileges

and immunities clause, and (iv) the First Amendment. Core-Mark sought

declaratory and injunctive relief against continued implementation and

2
      The Board of Livestock is the department head of the Department of
Livestock. Mont. Code Ann. § 2-15-3101.

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enforcement of the 12 Day Rule and Single Date Rule.

                                          II.

      We must decide whether Core-Mark has Article III standing to raise its

sundry constitutional claims. Core-Mark’s burden is not an onerous one. At the

motion to dismiss stage, “general factual allegations of injury resulting from the

defendant’s conduct may suffice, for on a motion dismiss [the court] presum[es]

that general allegations embrace those specific facts that are necessary to support

the claim.” Lujan v. Defenders of Wildlife¸ 504 U.S. 555, 561 (1992) (internal

quotation marks omitted).

      Core-Mark has Article III standing because it alleges actual and imminent

economic harms that are concrete and particular to itself, fairly traceable to the

challenged regulation, and which are likely to be redressed by an order enjoining

the regulation’s continued implementation and enforcement. See id. at 560–61.

      Injury-in-fact. Core-Mark alleges that the Montana regulation increases its

costs “by forcing [it] to separately package, label, and inventory milk destined for

sale in Montana and to make more frequent and smaller deliveries to [its] retail

customers in Montana.” At an evidentiary hearing on Core-Mark’s motion for a

preliminary injunction and temporary restraining order, Mark Huelskamp, the

Spokane Division President of Core-Mark, also testified that the 12 Day Rule

negatively affects Core-Mark’s operations by requiring it “to make more deliveries

                                          4
than necessary.” As to the Single Date Rule, Mr. Huelskamp testified that it

increases Core-Mark’s costs by requiring it to “create[] two separate inventories.”

Under the Dual Date Exemption, by contrast, Core-Mark could carry one inventory

and take advantage of operational efficiencies that resulted in “very little waste.”3

      These are concrete harms particular to Core-Mark that are “capable of proof

at trial.” See United States v. Students Challenging Regulatory Agency Procedures

(SCRAP), 412 U.S. 669, 688–89 (1973). They are also actual and imminent, as

they are occurring and will persist absent relief. See Summers v. Earth Island Inst.,

555 U.S. 488, 495–96 (2009).

      Traceability. Core-Mark’s injuries are “fairly traceable to the challenged

[regulation], and not the result of the independent action of some third party not

before the court.” Defenders of Wildlife, 504 U.S. at 560–61 (internal quotation

marks and adjustments omitted). Core-Mark points to specific harms to its

operations that are the direct result of the challenged regulation, such as the fact

that the regulation requires separate inventories and packaging of milk that Core-

Mark sells in Montana. That suffices to show causation for purposes of Article III

standing.

3
      Core-Mark also has a cognizable injury based on the Montana statute
holding milk distributors criminally liable for violating state regulations. Mont.
Code Ann. § 81-23-405. Core-Mark need not violate the regulation and risk
probable prosecution to have standing to challenge an allegedly unconstitutional
law. See Abbott Labs. v. Gardner, 387 U.S. 136, 154 (1967).

                                           5
      Redressability. Finally, Core-Mark sufficiently alleges that its injuries

would likely be redressed by a favorable ruling. See Novak v. United States, 795
F.3d 1012, 1019 (9th Cir. 2015). Granting Core-Mark’s requested relief—an

injunction against further implementation of the challenged regulation—is likely to

result in streamlined business operations and lower costs, thereby mitigating its

economic harms.

                                          III.

      As a prudential matter, Core-Mark has standing only to assert its own rights.

See Powers v. Ohio, 499 U.S. 400, 410–11 (1991). A litigant “generally must

assert his own legal rights and interests, and cannot rest his claim to relief on the

legal rights or interests of third parties.” Kowalski v. Tesmer, 543 U.S. 125, 129

(2004) (internal quotation marks omitted). We find that test easily met here, as all

of the alleged constitutional violations pertain to Core-Mark’s own right to engage

in commercial speech and interstate commerce without unconstitutional

interference.4

                                          IV.

      Core-Mark has demonstrated Article III standing to press its constitutional

claims at this stage of the litigation. We therefore VACATE the judgment of the

4
        In determining that Core-Mark has standing at the motion to dismiss stage of
this litigation, we express no opinion on the merits of Core-Mark’s constitutional
claims.

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district court and REMAND for further proceedings consistent with this decision.

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