AMERICAN BEVERAGE ASSOCIATION, Plaintiff-Appellant, v. Rick SNYDER, Bill Schuette, and Andrew Dillon, Defendants-Appellees, Michigan Beer & Wine Wholesalers Association, Intervenor-Appellee.
No. 11-2097.
United States Court of Appeals, Sixth Circuit.
January 7, 2013.
700 F.3d 646
Argued: July 20, 2012. Decided and Filed: Jan. 7, 2013.
Scotts is distinguishable. In Scotts, the first mention of pre-judgment interest in the opinions of the district court was the final judgment, not any of the earlier judgments. Id. at 783, 786-88. As the district court stated, the Scotts opinion “merely aligned the accrual of prejudgment interest with the date that prejudgment interest was first awarded.” Here, there is no question that pre-judgment interest was awarded by the district court in the First Interest Opinion. This makes this case factually closer to Skalka than to Scotts. Thus, we affirm the district court‘s judgment with regard to the date that pre-judgment interest terminates.
III. CONCLUSION
Accordingly, we AFFIRM the district court‘s judgment in part, REVERSE in part, and REMAND for further proceedings consistent with the opinion. In addition, we DISMISS AS MOOT Stryker‘s motion to strike a portion of XL‘s Reply Brief.
Before: CLAY and SUTTON, Circuit Judges; RICE, District Judge.*
CLAY, J., delivered the opinion of the court in which SUTTON, J., and RICE, D. J., joined. SUTTON, J. (pp. 377–81), delivered a separate concurring opinion. RICE, D.J. (pp. 381-82), also filed a separate concurring opinion.
AMENDED OPINION
CLAY, Circuit Judge.
Plaintiff, the American Beverage Association (“Association“), appeals the district court‘s order granting summary judgment to Defendants, Governor Rick Snyder, Attorney General Bill Schuette, and Michigan Treasurer Andrew Dillon in their official capacities (collectively Defendants), and the Michigan Beer & Wine Wholesalers Association (“MBWWA“), which intervened in support of Defendants. Plaintiff argues that
BACKGROUND
A. Michigan‘s Beverage Container Deposit Law
Michigan is one of ten states that requires consumers to pay a can, plastic bottle, or glass bottle deposit when purchasing specified beverage containers.
B. The Redemption Problem
Although the Bottle Bill has been successful in improving the environment by promoting the recycling of beverage containers, the bill also created two unanticipated problems: (1) consumers deposited more money on nonalcoholic beverage containers than distributors or manufacturers paid out in refunds (underredemption); and (2) the value of the deposits collected by the distributor or manufacturer was less than the total value of refunds paid (overredemption). To address the problem of underredemption, the Michigan Legislature amended the Bottle Bill in 1989, and mandated that the value of unclaimed deposits escheat to the State Treasury. Under the amendment, the State Treasury gave 25 percent of the unclaimed revenue to in-state beverage retailers and the remaining 75 percent financed a Michigan cleanup and redevelopment trust fund. See
Despite the 1989 Bottle Bill Amendment, the redemption problem continued. Specifically, the State recognized that individuals would purchase beverage containers outside of Michigan and then attempt to return the beverage containers in Michigan to redeem the ten-cent deposit. As a result, the unauthorized returns and redemptions reduced the revenue stream to the State because no deposit was paid to the State of Michigan. A 1998 study estimated that fraudulent redemption in Michigan of beverage containers originating from outside of Michigan resulted in a loss of $15.6 to $30 million every year in Michigan deposits. In an effort to reduce these fraudulent redemptions, the Michigan Legislature enacted a statute criminalizing the redemption of containers by any individual who knows or should have known that no deposit was paid on the container. See
C. Michigan‘s Unique-Mark Amendment to the Bottle Bill
In December 2008, the Michigan Legislature amended the State‘s Bottle Bill in order to increase revenue to the State. The Amendment required that, in addition to the MI 10¢ designation, containers for certain brands of beverages bear a “symbol, mark, or other distinguishing characteristic that is placed on a designated metal container, designated glass container, or designated plastic container by a manufacturer to allow a reverse vending machine to determine if that container is a returnable container....” See
Plaintiff is a “non-profit association of the manufacturers, marketers, distributors, and bottlers of virtually every nonalcoholic beverage sold in the United States,” including bottled water, juices, juice drinks, soft drinks, teas, dairy beverages, sports drinks, and energy drinks. (Pl.‘s Br. 12.) Plaintiff seeks to protect “its members’ legal rights and the interests of the industry and beverage consumers” and represents members that produce beverages regulated by the Michigan 2008 Amendment to the Bottle Bill. (
On February 25, 2011, Plaintiff filed this action in the United States District Court for the Western District of Michigan against Defendants, seeking declaratory, injunctive, and other relief. Plaintiff claimed that
Plaintiff moved for summary judgment arguing that, as a matter of law, the challenged statute is both extraterritorial and discriminatory in violation of the dormant Commerce Clause. Alternatively, Plaintiff argued that it should prevail under the balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970), which upholds a state regulation unless the burden on interstate commerce outweighs the local benefits. 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) (citing Pike, 397 U.S. at 142, 90 S.Ct. 844). Defendants filed their response in opposition to summary judgment and, alternatively moved for summary judgment in their favor. On April 26, 2011, the district court issued an order, which permitted the MBWWA to intervene in support of Defendants.
DISCUSSION
I. Standard of Review
We review de novo the district court‘s grant of summary judgment. Odle v. Decatur Cnty., Tenn., 421 F.3d 386, 389 (6th Cir.2005). Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
II. Dormant Commerce Clause
Under the Commerce Clause, Congress has the power “[t]o regulate Commerce with foreign Nations, and among the several States....”
This Circuit has adopted a two-step analysis to evaluate challenges to the dormant Commerce Clause. Int‘l Dairy Foods Ass‘n v. Boggs, 622 F.3d 628, 644 (6th Cir.2010). Under the first step, we must determine whether “a state statute directly regulates or discriminates against
If the plaintiff satisfies its burden, then “a discriminatory law is virtually per se invalid and will survive only if it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Id. at 328, 128 S.Ct. 1801 (quoting Or. Waste Sys., Inc., 511 U.S. at 101, 114 S.Ct. 1345 (internal citation omitted)). However, if the state regulation is neither discriminatory nor extraterritorial, then the court must apply the balancing test established in Pike. Under the Pike balancing test, a state regulation is upheld “unless the burden it imposes upon interstate commerce is ‘clearly excessive in relation to the putative local benefits.‘” Int‘l Dairy, 622 F.3d at 644 (quoting Pike, 397 U.S. at 142, 90 S.Ct. 844).
A. Mich. Comp. Laws § 445.572a(10), Michigan‘s unique-mark provision, does not discriminate against interstate commerce
Plaintiff argues that the Michigan unique-mark mandate, which requires certain beverage containers to possess a particular “symbol, mark, or other distinguishing characteristic,”
1. Facial Discrimination
Plaintiff claims that the unique-packing requirement facially violates the dormant Commerce Clause because the provision only applies to interstate manufacturers or shippers of beverages. According to Plaintiff, “Michigan enacted operative thresholds that are sufficiently high [and] are only met by companies who have a very high volume of business—that is, national brands.” (Pl.‘s. Br. at 40.) The district court found that Michigan‘s unique-mark provision is not facially discriminatory because “by its plain terms, the unique-mark requirement applies to all beverage manufacturers who meet the specified threshold regardless of their in-state or out-of-state origins.”
“To determine whether a law violates [the] ‘dormant’ aspect of the Commerce Clause, we first ask whether it discriminates on its face against interstate commerce.” United Haulers Ass‘n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 338, 127 S.Ct. 1786, 167 L.Ed.2d 655 (2007) (citations omitted). “[D]iscrimination against interstate commerce in favor of local business or investment is per se invalid....” Carbone, 511 U.S. at 392, 114 S.Ct. 1677 (citation omitted). Thus, a state law is per se invalid if it provides “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” United Haulers, 550 U.S. at 338, 127 S.Ct. 1786 (internal quotation marks and citation omitted).
A symbol, mark, or other distinguishing characteristic that is placed on a designated metal container, designated glass container, or designated plastic container by a manufacturer to allow a reverse vending machine to determine if that container is a returnable container must be unique to this state, or used only in this state and 1 or more other states that have laws substantially similar to this act.
2. Purposeful Discrimination
Plaintiff also alleges that Michigan‘s unique-mark provision has a discriminatory purpose on the basis that the provision prohibits the sale of the same beverage containers manufactured in Michigan and other states, and prevents vendors in Michigan from purchasing the same beverage containers manufactured by out-of-state distributors.
To determine whether a state regulation purposefully discriminates within interstate commerce, we turn to the actual language in the statute. This is because the most “persuasive evidence of the purpose of a statute [are] the words by which the legislature undertook to give expression to its wishes. Often these words are sufficient in and of themselves to determine the purpose of the legislation. In such cases we have followed their plain meaning.” E. Ky. Res., 127 F.3d at 542 (quoting Perry v. Commerce Loan Co., 383 U.S. 392, 400, 86 S.Ct. 852, 15 L.Ed.2d 827(1966)). Our review not only includes the statute itself, but also the legislative history and legislative intent to determine whether the statute achieved its legislative purpose.
Our analysis is somewhat limited given the scant legislative history of the State‘s provision. The Michigan Legislature stated that the intended purpose of the statute was to prevent the illegal, fraudulent redemption of beverage containers in the State. See, e.g., House Fiscal Agency,
3. Discriminatory Effect
A statute may be discriminatory in effect if “the claimant [can] show both how local economic actors are favored by the legislation, and how out-of-state actors are burdened by the legislation.” Int‘l Dairy, 622 F.3d at 648 (quoting E. Ky. Res., 127 F.3d at 543).
Plaintiff identifies three reasons why Michigan‘s unique-mark provision is discriminatory in effect: “(1) the law requires the creation and maintenance of special state-exclusive production and distribution operations in order to do business in Michigan; (2) it eliminates the competitive advantages otherwise enjoyed by interstate companies; and (3) it impedes the free movement of commerce by imposing an economic and practical toll on interstate companies only.” (Pl.‘s Br. 42-43); see also Granholm v. Heald, 544 U.S. 460, 460, 125 S.Ct. 1885, 161 L.Ed.2d 796 (2005); Hunt v. Washington State Apple Adver. Comm‘n, 432 U.S. 333, 351, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977).
Plaintiff relies on the Supreme Court case of Granholm v. Heald to show that the provision has a discriminatory purpose. In Heald, Michigan residents and an out-of-state winery alleged that Michigan laws that governed the distribution of alcohol violated the Commerce Clause because the laws allowed in-state wineries to ship directly to consumers in Michigan, subject only to a licensing requirement, while out-of-state wineries, whether licensed or not, were prohibited from direct shipment. Heald, 544 U.S. at 469, 125 S.Ct. 1885. The Supreme Court held that the Michigan regulatory scheme discriminated against interstate commerce because out-of-state wineries faced “two extra layers of overhead [which] increase[d] the cost of out-of-state wines to Michigan consumers.” Id. at 474, 125 S.Ct. 1885. The Court explained that “[t]he differential treatment require[d] all out-of-state wine, but not all in-state wine, to pass through an in-state wholesaler and retailer before reaching consumers.” Id. Plaintiff in this case alleges in a similar fashion that the “Michigan-exclusive packaging mandate similarly requires interstate beverage companies to establish a Michigan-only production,
Heald is distinguishable, however, on the basis that the Michigan laws in Heald purposefully imposed a burden on out-of-state wineries by implementing a complete ban on direct shipment while allowing in-state wineries to enjoy the benefits of direct shipment. This type of regulatory scheme clearly attempted to affect the market playing field by allowing Michigan wineries to gain market share against their out-of-state competitors.
In this case, the Michigan provision does not favor in-state beverage manufacturers and distributors over out-of-state. The unique-mark provision requires all those who sell certain amounts of beverages in Michigan to use the same unique-to-Michigan mark, without any reference to in-state or out-of-state origins. Contrary to Plaintiff‘s assertion, the Michigan provision does not create an “extra layer of overhead” because all manufacturers and distributors are subject to the same provision. In essence, any manufacturer who wants to sell and distribute beverage containers regardless of whether they are in-state or out-of-state, is subject to the unique-mark provision. Thus, we agree with the district court‘s assessment that “the unique-mark requirement burdens in-state beverage manufacturers who meet the designated thresholds to the same extent it burdens out-of-state manufacturers who meet the designated thresholds.” We therefore conclude that the State‘s statute does not discriminate against interstate commerce on this basis.
B. Mich. Comp. Laws § 445.572a(10) is extraterritorial in violation of the dormant Commerce Clause
Despite our conclusion that Michigan‘s unique-mark provision does not
The Supreme Court has applied the extraterritoriality doctrine only in the limited context of price-affirmation statutes. These statutes force regulated entities to certify that the in-state price they charge for a good is no higher than the price they charge out-of-state. See Healy, 491 U.S. at 337-40, 109 S.Ct. 2491; Brown-Forman, 476 U.S. at 582-84, 106 S.Ct. 2080. In Brown-Forman, New York instituted a law that required distillers who posted wholesale prices in the state to not charge a lower price for the product in any other state during the month of posting. The New York law prevented the distillers from offering promotional allowances to wholesalers in other states, because the allowances lowered the effective price below the New York posted price. Brown-Forman, 476 U.S. at 577-78, 106 S.Ct. 2080. The Supreme Court found that by “[f]orcing a merchant to seek regulatory approval in one State before undertaking a transaction in another directly regulates interstate commerce.” Id. at 582, 106 S.Ct. 2080. Although New York is within its power to regulate the sale of liquor within its state, the Court held that “it may not project its legislation into [other States] by regulating the price to be paid for liquor in those States.” Id. at 582-83, 106 S.Ct. 2080 (internal quotation marks and citation omitted).
Similarly in Healy, the Supreme Court struck down Connecticut‘s price affirmation statute, which required out-of-state beer distributors to post their prices on each brand of beer sold in the State and to also affirm that their posted prices were no higher than prices in the border states of Massachusetts, Rhode Island, and New York. Healy, 491 U.S. at 326-29, 109 S.Ct. 2491. The Court found that Connecticut‘s statute created “the kind of competing and interlocking local economic regulation that the Commerce Clause was meant to preclude.” Id. at 337, 109 S.Ct. 2491. In addition, the Court concluded that the “effect of the Connecticut statute is essentially indistinguishable from the extraterritorial effect found unconstitutional in Brown-Forman” by requiring “out-of-state shippers to forgo the implementation of competitive-pricing schemes in out-of-state markets because those pricing decisions are imported by statute into the Connecticut market regardless of local competitive conditions.” Id. at 339, 109 S.Ct. 2491. Therefore, the Court concluded that any statute that has “the undeniable effect of controlling commercial activity occurring wholly outside the boundary of the State” is extraterritorial and violates the dormant Commerce Clause. Id. at 337, 109 S.Ct. 2491.
The district court noted that the Sixth Circuit has applied the extraterritorial doctrine to product labeling restrictions. Specifically, we held in International Dairy that Ohio‘s labeling rule, which restricted the “types of claims that dairy processors could make about milk and milk products” did not violate the dormant Commerce Clause. Int‘l Dairy, 622 F.3d at 633-34. The plaintiffs argued that Ohio‘s labeling rule “force[d] them to create a nationwide label in accordance with Ohio‘s requirements” in order to satisfy the complex national distribution channels for milk products. Id. at 647. The Sixth Circuit disagreed and stated that:
[U]nlike the price-affirmation statutes, which directly tied their pricing requirements to the prices charged by the distillers in other states, the Ohio Rule‘s labeling requirements have no direct effect on the Processors’ out-of-state labeling conduct. That is to say, how the Processors label their products in Ohio has no bearing on how they are required to label their products in other states (or vice versa). Nor does compliance with the Ohio Rule raise the possibility that the Processors would be in violation of the regulations of another state—the key problem with the New York statute in Brown-Forman. The Rule accordingly does not purport to regulate conduct occurring wholly outside the state.
Id. (quotation marks and citation omitted). Thus, the Sixth Circuit concluded that Ohio‘s product labels could be used anywhere in the country and did not create an extraterritorial problem.
But Plaintiff asserts that this case does not fit squarely either within the price-affirmation extraterritorial cases addressed by the Supreme Court or the product labeling case from this Circuit. Rather, Plaintiff claims that Michigan‘s unique-mark requirement is “quite differ-
Defendants dismiss Plaintiff‘s argument by stating that Michigan‘s unique-mark requirement does not govern extraterritorially because no conflict exists between the states since Michigan is the only state with a unique-mark requirement, and the statute‘s requirements does not directly control conduct occurring wholly outside the State‘s border. We find Defendants’ logic flawed for several reasons.
First, Defendants fail to explore other alternative measures that could combat the State‘s redemption problem. Defendants argue that the State‘s provision is the only means to prevent fraudulent redemption and allow the State to retrieve unclaimed deposits to increase the state‘s revenue. But it is difficult to reconcile how this provision is the only means for the State to address its redemption problem, when no
Furthermore, the nine other states that have instituted bottle deposit laws seemed to have adopted regulations without imposing any criminal or civil penalties on in-state or out-of-state manufacturers and distributors.6 Although these alternative approaches may or may not be less desirable or may potentially raise other concerns, Defendants failed to consider reasonable alternatives before first committing themselves to a problematical course by implementing an invalid provision on extraterritorial grounds.
As we previously indicated, our analysis of the extraterritorial effect of the State‘s
As an initial matter, we recognize that this case presents a novel issue of an “unusual extraterritoriality question” that has not been addressed either by the Supreme Court or any other court. To date, no other state has implemented a requirement similar to Michigan‘s. However, Defendants’ reference to Plaintiff‘s argument as a “hypothetical inquiry” also deflects attention away from the real issue in that Michigan‘s unique-mark requirement not only requires beverage companies to package a product unique to Michigan but also allows Michigan to dictate where the product can be sold. The reach of this statute and the criminal penalty for violations cannot be as easily dismissed as suggested by Defendants. Plaintiff must comply with the statute now or face criminal sanctions. In addition, other states must react today to Michigan‘s unique-mark requirement or also face legal consequences. Thus, Michigan is forcing states to comply with its
CONCLUSION
In sum, we conclude that
SUTTON, Circuit Judge, concurring.
I join Judge Clay‘s opinion in full. I write separately to express skepticism about the extraterritoriality doctrine, the fulcrum of today‘s decision and a branch of the dormant Commerce Clause that the Supreme Court last referred to nine years ago as the doctrine “applied in Baldwin and Healy,” decisions from 1935 and 1989. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 669, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003); see Healy v. Beer Inst., 491 U.S. 324, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989); Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032 (1935).
A little history helps to explain how the extraterritoriality doctrine became the “dormant branch of the dormant Commerce Clause.” IMS Health Inc. v. Mills, 616 F.3d 7, 29 n. 27 (1st Cir.2010), abrogated on other grounds by Sorrell v. IMS Health Inc., — U.S. —, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011). To the founding generation, it was an article of common faith that “no state or nation can, by its laws, directly affect, or bind property out of its own territory, or bind persons not resident therein.” Joseph Story, Commentary on the Conflict of Laws § 20 (1834). A State‘s power to “protect the lives, health, and property” of its residents was “essentially exclusive,” United States v. E.C. Knight Co., 156 U.S. 1, 11, 15 S.Ct. 249, 39 L.Ed. 325 (1895), given the then-modest regulatory authority of the National Government under the Commerce Clause. And no State could regulate “except with reference to its own jurisdiction” because each State‘s powers ended at its
Over time, the lines between the separate spheres blurred, in part because the nature of commerce changed, in part because the Supreme Court‘s interpretation of the Commerce Clause changed. The Federal Government gained power over traditionally “local” activities, ending the States’ exclusive regulatory power. See, e.g., United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609 (1941). And the States began to regulate commerce that eventually would cross state lines, ending the Federal Government‘s exclusive authority. If States did not discriminate against out-of-state interests or disproportionately burden interstate commerce, they could share regulatory authority with the Federal Government, at least so long as Congress did not exercise its option of regulating the area exclusively. See, e.g., S.C. Highway Dep‘t v. Barnwell Bros., Inc., 303 U.S. 177, 58 S.Ct. 510, 82 L.Ed. 734 (1938) (upholding a state statute regulating the size of trucks using the State‘s highways despite the law‘s burden on interstate commerce); Milk Control Bd. v. Eisenberg, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. 752 (1939) (upholding a state statute setting minimum prices for milk shipped for sale out of state); Duckworth v. Arkansas, 314 U.S. 390, 62 S.Ct. 311, 86 L.Ed. 294 (1941) (upholding a state statute requiring a license to transport liquor
One measure of this transformation, from using the Commerce Clause to monitor largely exclusive spheres of authority to overseeing largely overlapping spheres of authority, is this: Today, a State may fix the price of natural gas drilled within its borders and purchased at the wellhead, even when 90 percent of the gas will be shipped out of state. Cities Serv. Gas Co. v. Peerless Oil & Gas Co., 340 U.S. 179, 71 S.Ct. 215, 95 L.Ed. 190 (1950). And today the Federal Government may regulate local loan sharking that never crosses state lines. Perez v. United States, 402 U.S. 146, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971).
Which brings me back to extraterritoriality. Is it possible that the extraterritoriality doctrine, at least as a freestanding branch of the dormant Commerce Clause, is a relic of the old world with no useful role to play in the new? I am inclined to think so.
When the central function of the dormant Commerce Clause was to keep the States and the Federal Government in their separate spheres of regulatory authority, it made sense to think of extraterritoriality as a relevant proxy for interstate-commerce violations. Extraterritorial lawmaking after all operates on one side of this line and territorial lawmaking operates on the other. But that line has come and gone. The key point of today‘s dormant Commerce Clause jurisprudence is to prevent States from discriminating against out-of-state
Yet the extraterritoriality doctrine, if taken seriously (or at least as seriously as Healy has taken it), has nothing to do with favoritism. Even state laws that neither discriminate against out-of-state interests nor disproportionately burden interstate commerce may run afoul of extraterritoriality, as this case well shows. All three of us agree that the Michigan redemption law does not favor in-state entities at the expense of out-of-state ones, and yet all three of us agree that the law violates the extraterritoriality doctrine applied in Healy. That is because, if a State regulates “commerce that takes place wholly outside of the State‘s borders,” that regulation is automatically invalid, no matter how great the regulation‘s local benefit, no matter how small its out-of-state burden. Healy, 491 U.S. at 336, 109 S.Ct. 2491; see also Edgar v. MITE Corp., 457 U.S. 624, 642-43, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982) (plurality opinion) (stating that an extraterritorial regulation of tender offers was invalid “whether or not the commerce has effects within the State“); Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 583, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986) (striking down New York‘s price-affirmation law based on its extraterritorial effect). Even a hypothetical state law that facilitated interstate commerce—say, an Ohio law that gave tax credits to automobile companies that keep open the production lines of their factories in Michigan and elsewhere—would be invalid if it had extraterritorial “practical effect[s].” Healy, 491 U.S. at 336, 109 S.Ct. 2491. Whatever role extraterritoriality once played in Commerce Clause law, it is difficult to perceive the interstate-commerce function it plays today.
Not just the original function of the extraterritoriality doctrine has been lost to
California is not unique, and emission standards are not the only area where this problem arises. Ohio requires state-specific milk labels. Int‘l Dairy Foods Ass‘n v. Boggs, 622 F.3d 628 (6th Cir.2010). Vermont insists that light bulbs come with labels warning of the dangers of mercury. Nat‘l Elec. Mfrs. Ass‘n v. Sorrell, 272 F.3d 104 (2d Cir.2001). And many States tax businesses that operate across state lines. See, e.g., MeadWestvaco Corp. ex rel. Mead Corp. v. Ill. Dep‘t of Revenue, 553 U.S. 16, 24-25, 128 S.Ct. 1498, 170 L.Ed.2d 404 (2008).
What‘s more, we already have an ineffable test for invalidating some state regulations but not others that affect interstate commerce. State regulations that burden, but that do not facially discriminate against, interstate commerce must survive Pike balancing, which requires a State to show that the in-state regulatory benefits of a law outweigh the out-of-state burdens the law places on interstate commerce. See Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). The inquiry asks courts to balance interests they are ill-equipped to measure, let alone to compare. See Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 619, 117 S.Ct. 1590, 137 L.Ed.2d 852 (1997) (Thomas, J., dissenting) (noting that balancing “invites us, if not compels us, to function more as legislators than as judges“); Bendix Autolite Corp. v. Midwesco Enters., Inc., 486 U.S. 888, 897, 108 S.Ct. 2218, 100 L.Ed.2d 896 (1988) (Scalia, J., concurring) (pointing out that Pike reduces courts to asking “whether a particular line is longer than a particular rock is heavy“).
Why have two tests that suffer from these problems rather than just one? If Pike is problematic for this reason, so too is the extraterritoriality doctrine. The original function of the doctrine no longer exists, and it is exceedingly difficult to understand which extraterritorial effects
Eliminating extraterritoriality as a freestanding Commerce Clause prohibition also would not eliminate the role of territory in constitutional law. Territorial limits on lawmaking underlie, indeed animate, many other constitutional imperatives. The most powerful of these, due process, limits a State‘s power to extend its law outside its borders. A State must have at least some contact with a defendant to exercise personal jurisdiction, see World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293-94, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); its courts may not impose punitive damages that are “grossly excessive” to the State‘s interest in the conduct underlying a lawsuit, BMW of N. Am. v. Gore, 517 U.S. 559, 569, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996); and it can criminalize only conduct that produces “detrimental effects” within its borders, Strassheim v. Daily, 221 U.S. 280, 285, 31 S.Ct. 558, 55 L.Ed. 735 (1911). Even if Ohio, for instance, made it illegal for its citizens to gamble, the State could not prosecute Ne-
The Full Faith and Credit Clause underscores a related geographical limitation on the States’ police power. States must respect “public acts which are within the legislative jurisdiction of the enacting State,” but they face no similar imperative for extraterritorial laws. Bradford Elec. Light Co. v. Clapper, 286 U.S. 145, 156, 52 S.Ct. 571, 76 L.Ed. 1026 (1932). The Extradition Clause likewise presupposes territorial lawmaking limits when it speaks of the “State having Jurisdiction of the Crime,”
Although extraterritoriality underlies these constitutional imperatives, it carries no freestanding weight outside of them. A law that does not discriminate against interstate commerce, that complies with the traditional requirements of due process and that complies with these other limitations, it seems to me, should not be invalidated solely because of an extraterritorial effect. See, e.g., Alaska Packers Ass‘n v. Indus. Accident Comm‘n, 294 U.S. 532, 541-42, 55 S.Ct. 518, 79 L.Ed. 1044 (1935).
Eliminating extraterritoriality as a freestanding Commerce Clause prohibition also would not change case outcomes. In Healy, extraterritoriality was an alternative holding. The Court independently held that Connecticut‘s law discriminated
Nor is there anything special about the Michigan redemption law that ought to make it unconstitutional under the extraterritoriality doctrine but not the traditional dormant Commerce Clause doctrine or some other constitutional guarantee. The law does not discriminate against interstate commerce by favoring in-state bottlers at the expense of out-of-state ones. Even though the unique-mark requirement serves a vital state interest and imposes only a minuscule burden on interstate
Michigan, perversely enough, could have chosen to reduce bottle-deposit fraud by enacting regulations far more hurtful to interstate commerce yet not extraterritorial. The State might have required beverage manufacturers to place a large “Made for Sale in Michigan” label on their products, demanded a burdensome warning label or mandated that manufacturers sell bottles in unusual sizes and shapes that fit only Michigan bottle-redemption machines. So long as those regulations survived Pike balancing, they would be constitutionally permissible. See, e.g., Int‘l Dairy, 622 F.3d at 648-49; Sorrell, 272 F.3d at 108-09. Michigan instead chose a nondiscriminatory method premised on compliance in other States, a seeming requirement of any innocuous unique-mark requirement. It is only a non-innocuous unique-mark requirement—the more offensive to the bottler the better—that frees Michigan from having to worry about fraudulent redemptions arising from non-unique-mark sales in other States. How strange. The Michigan law penalizes manufacturers who bottle soda cans in Ohio and sell them in Ohio but happen to use a Michigan mark. Extraterritoriality—nominally an offshoot of the Commerce Clause—thus requires courts to strike down a nondiscriminatory state law that affects a purely intrastate transaction. Whatever problem such a law poses, I am hard-pressed to understand why the dormant-dormant Commerce Clause should regulate it.
RICE, District Judge, concurring.
I concur in Judge Clay‘s opinion, but I write separately for two reasons. First,
Sorrell involved a Vermont statute that required manufacturers of products containing mercury to label the products as such and to direct consumers to recycle the products or dispose of them as hazardous waste. The court found that the statute did not have the practical effect of regulating interstate commerce. It rejected the manufacturers’ claim that the statute essentially required them to so label all products regardless of where they were sold, noting that manufacturers could choose to modify their production and distribution systems to differentiate between those products bound for Vermont and those that were not. The court also rejected a claim that the manufacturers could be exposed to multiple, inconsistent labeling requirements imposed by other States, noting that a risk of conflicting statutes was insufficient. Rather, there had to be an actual conflict, and none was shown. Id. at 112.
Seizing on this language from Sorrell, the district court held that because no other State has enacted a “unique mark” requirement, the ABA could not show that Michigan‘s statute actually conflicts with requirements imposed by any other State. The district court‘s reliance on Sorrell is misplaced. Under the circumstances presented here, whether or not manufacturers are, in fact, subject to inconsistent labeling requirements, the potential for havoc certainly exists. Notably, in Healy v. Beer Institute, 491 U.S. 324, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989), there was no actual conflict at issue. Nevertheless, the Su-
Michigan does not get a “free pass” to enact extraterritorial legislation just because it is the first State to do so. The statute at issue controls conduct beyond Michigan‘s borders by impliedly requiring manufacturers to use a different label everywhere else. In contrast to Sorrell, where manufacturers had the option of using the State-compliant label nationwide, manufacturers have no such option under Michigan‘s law.
I also write separately to clarify that because we have found the statute to be extraterritorial, it must be struck down, and that is the end of the inquiry. It appears that the parties and the district court all assumed that if the statute were found to be either discriminatory or extraterritorial, the next step would be to determine whether it nevertheless “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Dep‘t of Revenue of Ky. v. Davis, 553 U.S. 328, 338, 128 S.Ct. 1801, 170 L.Ed.2d 685 (2008).1 This additional inquiry, however, applies only to statutes that are deemed discriminatory. It has no application to a statute that has been deemed extraterritorial. To the extent that Part II(B) of the majority opinion implies otherwise, in stating that “no other efforts were made by Defendants that could potentially satisfy the state‘s purported legitimate purpose in a non-extraterritorial fashion,” I believe that some clarification is helpful.