Johnson & Johnson Vision Care, Inc. v. Reyes, 665 F. App'x 736

Background

Four manufacturers (Johnson & Johnson, Alcon, Bausch & Lomb, CooperVision) control ~98.5% of the U.S. contact-lens market; three plaintiffs (first three) have no offices or manufacturing in Utah.
In 2013 the manufacturers adopted uniform pricing policies (UPPs) setting minimum retail prices and reserving the right to cut off supply to retailers who sell below the floors.
Utah enacted Utah Code Ann. § 58-16a-905.1 (2015), forbidding manufacturers from fixing or controlling retail prices for contact lenses sold in Utah and from discriminating against retailers that sell below manufacturer price floors; the AG may enforce with civil actions and penalties.
Manufacturers sued seeking a preliminary injunction, arguing the Utah law violates the dormant Commerce Clause (claims: facial/practical discrimination against interstate interests, undue burden under Pike balancing, and impermissible extraterritorial effect). The district court denied the preliminary injunction; the Tenth Circuit affirmed.
The district court (and majority) treated the statute as presumptively constitutional, interpreted it to apply only to sales by retailers in Utah, and concluded plaintiffs were unlikely to succeed on dormant Commerce Clause claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §58-16a-905.1 discriminates against interstate commerce	Utah’s law favors Utah retailers and burdens out-of-state manufacturers/retailers by removing manufacturers’ price control only in Utah	Statute is facially neutral as to interstate commerce, applies only to retailers in Utah, and does not burden or treat out-of-state actors worse	No discrimination: statute governs retail sales in Utah only and treats all Utah retailers the same; plaintiffs unlikely to succeed
Whether §58-16a-905.1 imposes an undue burden on interstate commerce (Pike balancing)	UPPs are nationwide; Utah’s ban interferes with manufacturers’ pricing nationwide and imposes excessive burdens	Statute advances local benefits (restore intrabrand competition, lower prices for Utah consumers) and any burden is comparable to ordinary state antitrust regulation	No undue burden: record supports local benefits and plaintiffs failed to show burden clearly excessive relative to benefits
Whether §58-16a-905.1 has impermissible extraterritorial effect	By nullifying manufacturers’ price controls vis-à-vis Utah retailers (all manufacturers are out-of-state), the law effectively controls prices outside Utah or links Utah prices to other states	Statute contains no extraterritorial price-affirmation or price-control mechanism; it reaches only sales from Utah retailers and contains no requirement to affirm prices elsewhere	No extraterritorial effect: statute lacks the three characteristics that invalidate laws under Healy/Baldwin/Brown-Forman and is interpreted to apply only within Utah
Whether preliminary injunction was warranted given the equities and public interest	Manufacturers argued irreparable harm and public interest in protection from dormant Commerce Clause violations	District court found plaintiffs failed to show likelihood of success on merits so injunction standard not met; public interest supports state antitrust aims	Affirmed denial of preliminary injunction; court did not reach remaining equitable factors because plaintiffs failed the likelihood-of-success element

Key Cases Cited

Mazurek v. Armstrong, 520 U.S. 968 (preliminary injunction is extraordinary remedy)
Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (Pike balancing test for nondiscriminatory burdens on interstate commerce)
Healy v. Beer Inst., Inc., 491 U.S. 324 (1989) (state law may not have practical effect of controlling extraterritorial prices)
Exxon Corp. v. Governor of Maryland, 437 U.S. 117 (1978) (state law that treats all dealers the same does not necessarily violate Commerce Clause)
Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935) (invalidating state law that effectively controlled out-of-state prices)
Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986) (price-affirmation rules struck down under dormant Commerce Clause)
West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994) (state pricing scheme combined with federal minimums can have discriminatory effect)
Granholm v. Heald, 544 U.S. 460 (2005) (state regulatory scheme discriminating for in-state producers/retailers violates dormant Commerce Clause)
Hunt v. Wash. Apple Advert. Comm’n, 432 U.S. 333 (1977) (neutral statute can be invalid if its practical effect discriminates against interstate commerce)
Toomer v. Witsell, 334 U.S. 385 (1948) (state law imposing burdens on interstate fishermen invalid under Commerce Clause)
Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1 (1928) (state restriction interfering with interstate shrimp industry struck down)
City of Philadelphia v. New Jersey, 437 U.S. 617 (1978) (state law banning importation of out-of-state waste is discriminatory)
Energy & Envtl. Legal Inst. v. Epel, 793 F.3d 1169 (10th Cir. 2015) (discussing dormant Commerce Clause limits on state laws)
Doe v. City of Albuquerque, 667 F.3d 1111 (10th Cir. 2012) (presumption of statute constitutionality and avoidance canon)