SAFEWAY INC. v. City and County of San FranciscoSAFEWAY INC. v. City and County of San Francisco
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS WITH PREJUDICE
This lawsuit arises from the enactment of San Francisco Ordinance No. 194-08 (the original ordinance), as amended by San Francisco Ordinance No. 245-10 (the amended ordinance), San Francisco Health Code § 1009.01, which prohibits the sale of tobacco by any store within the City and County of San Francisco that contains a pharmacy. Defendants City and County of San Francisco, the Board of Supervisors for the City and County of San Francisco and Mayor Edwin M. Lee move to dismiss all of Plaintiffs claims. Plaintiff filed an opposition. The California Medical Association filеd an amicus curiae brief in support of Defendants’ motion to dismiss and Plaintiff filed an opposition to it. 1 The motion was heard on June 2, 2011. Having heard argument on the motion and considered all the papers filed by the parties, the Court grants the motion to dismiss, with prejudice.
BACKGROUND
The following facts are taken from Plaintiffs complaint and the documents attached to it and the documents of which the Court has taken judicial notice. 2
Plaintiff staffs its pharmacies with pharmacists licensed by the State of California. In its pharmacies, Plaintiff fills and sells prescriptions drugs to its customers. The pharmacies are isolated from the rest of the store by side walls, back walls, front cоunters, and locked doors. Thus, the pharmacies are separate and distinguishable from the retail floor space displaying general groceries, household supplies, nonprescription health and beauty supplies and other products. Plaintiffs pharmacies did not sell tobacco products. Tobacco products were sold only through the stores’ customer service booths and were only available to customers through staff who were not involved in pharmacy operations.
The Board enacted the original ordinаnce on August 5, 2008. It provided that “no person shall sell tobacco products in a pharmacy.” The word “pharmacy” was defined as “a retail establishment in which the profession of pharmacy by a pharmacist licensed by the State of California in accordance with the Business and Professions Code is practiced and where prescriptions are offered for sale. A pharmacy may also offer other retail goods in addition to prescription pharmaceuticals.” The original ordinance also provided that “the рrohibition against tobacco sales at pharmacies ... shall not apply to (a) General Grocery Stores and (b) Big Box Stores.” The original ordinance was based on the findings that: (1) tobacco is the leading cause of preventable death in the United States and the leading risk factor contributing to the burden of disease in the world’s high-income countries; (2) through the sale of tobacco products, pharmacies convey tacit approval of the purchase and use of tobacco products, which sends a mixed message tо consumers who generally patronize pharmacies for health care services; (3) in 1970, the American Pharmaceutical Association stated that mass display of cigarettes in pharmacies is in direct contradiction to the role of a pharmacy as a public health facility; (4) various professional and health care organizations have called for the adoption of state and local prohibitions of tobacco sales in drugstores and pharmacies; and (5) prescription drug sales for chain drugstores represent a significantly higher percentage of total sales than for grocery stores and big box stores that contain pharmacies. Comp., Ex. A, Findings 1, 7, 8, 9, and 21.
In September 2008, Walgreen Co., a retail chain that sells prescription and nonprescription drugs and general merchandise, filed a lawsuit in state court against Defendants alleging that the original ordinance violated its constitutional right to equal protection. It argued that it was arbitrary and capricious to exempt general grocery stores and big box stores that had pharmacies from the ban against selling tobacco products, when the ban was applied to Walgreen and other pharmacies that sold general merchandise, including tobacco products. The superior court sustained a demurrer to Walgreen’s complaint without leave to amend. The appellate court reversed, holding that granting an exemption to general grocery and big box stores, but not to Walgreen, was a denial of Walgreen’s right to equal protection.
See Walgreen Co. v. City and County of
In September 2010, after the remand of Walgreen to the superior court, the Board repealed the provision in the original ordinance that exempted general grocery and big box stores. See Comp., Ex. E, the amended ordinance. In amending the original ordinance, the Board recited that its purpose was to “head off further litigation over the proper remedy in the Walgreen case and remove any cloud over ongoing enforcement of the Article.” Comp., Ex. E, at 1. On October 10, 2010, the amended ordinance became law.
As a result of the amended ordinance, Defendants revoked the permits to sell tobacco products that had been issued to Plaintiffs ten stоres in San Francisco that operate pharmacies. Plaintiff competes with other grocery stores in San Francisco that do not contain pharmacies, but that offer products similar to those available in Plaintiffs non-pharmacy operations. Plaintiffs competitors without pharmacies remain eligible for a license to sell tobacco products. The ban on the sale of tobacco products in Plaintiffs ten stores that operate pharmacies has damaged Plaintiffs business.
Based on these allegations, Plaintiff asserts the following causes of action: (1) a request for an order declaring that the sale of tobacco products in the general merchandise area of Plaintiffs stores is not the equivalent of sale in a pharmacy and that Plaintiff is entitled to a permit to sell tobacco products in these areas; (2) violation of Plaintiffs federal and state constitutional right to sell tobacco products in the same stores in which it operates a pharmacy; (3) violation of Plaintiffs federal and state constitutional right to equal proteсtion; (4) violation of Plaintiffs federal and state constitutional right to due process; and (5) preemption by state law.
LEGAL STANDARD
A complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.Civ.P. 8(a). On a motion under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests.
Bell Atl. Corp. v. Twombly,
When granting a motion to dismiss, the court is generally required to grant the plaintiff leave to amend, even if no request to amend the pleading was made, unless amendment would be futile.
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc.,
Although the court is generally confined to consideration of the allegations in the pleadings, when the complaint is accompanied by attached documents, such documents are deemed part of the complaint and may be considered in evaluating the
DISCUSSION
I. Declaratory and Injunctive Relief Construing Amended Ordinance
In this cause of action, Plaintiff asks the Court to construe the amended ordinanсe to prohibit the sale of tobacco products only “in a pharmacy,” and not, as Defendants interpret it, to prohibit the sale of tobacco products in any store in which a pharmacy is located. Plaintiff bases this request on the language of the amended ordinance: “No person shall sell tobacco products in a pharmacy.” Plaintiff argues that Defendants are impermissibly expanding this language to regulate entire grocery stores that have pharmacies located in them.
A district court has jurisdiction over a genеral constitutional challenge to a statute.
Worldwide Church of God v.
McNair,
Plaintiff asks the Court to construe the amended ordinance in such a way as to avoid the constitutional issues it asserts in its subsequent causes of action. However, as discussed below, Plaintiff fails to state any constitutional claims upon which relief may be granted. Therefore, this claim is dismissed without leave to amend as amendment would be futile.
II. Violation of Right to Operate Lawful Business
Plaintiff alleges that it has a constitutionally protected interest, under the substantive due process clause of the Fourteenth Amendment to the United States Constitution and Article I, § 7 of the California constitution, 3 to operate a pharmacy business and a retail grocery business. It continues that the amended ordinance is unconstitutional because it denies Plaintiff permits to sell tobacco products unless it discontinues its pharmacy businesses. Comp. ¶¶ 76-81. Defendants respond that no constitutional right to do business is implicated when the government imposes generally applicable restrictions on business activities pursuant to its police power to promote public health, safety or welfare.
“Where a [business] permit has been properly obtained and in reliance thereon the permittee has incurred material expense, he acquires a vested property right to the protection of which he is entitled.”
O’Hagen v. Board of Zoning Adjustment,
However, the protection of a vested property right in a business permit generally must yield to the state’s concern for the public health and safety and its authority to legislate for the protection of the public.
See O’Hagen,
Although Plaintiff may have property rights in its business permits, it has not alleged facts that would demonstrate that the amended ordinance is an unwarranted and arbitrary interference with those rights. As illustrated by the cases Plaintiff cites, when courts have found an unconstitutional interference with a permit or right to do business, the government has singled out a particular business owner for arbitrary treatment. 4
In
Dobbins,
Similarly, in
O’Hagen,
In
Nollan v. California Coastal Commission,
The final case on which Plaintiff relies,
Frost v. Railroad Commission of the State of California,
In sum, although Plaintiff has alleged it has a vested property right in its permits, it cannot overсome the fact that the enactment of the amended ordinance was a reasonable and permissible use of Defendants’ police power.
See Spoklie,
III. Equal Protection Claim
The Fourteenth Amendment provides that no state may “deny to any рerson within its jurisdiction the equal protection of the laws.” U.S. Const, amend. XIV, § 1. The equal protection provision of the California constitution is substantially the same as the equal protection clause of the Fourteenth Amendment to the United States Constitution and, thus, may be analyzed under the same standard.
Walgreen,
In addressing a claim that a statute or regulation violates a plaintiffs right to equal protection, the court must first determine whether the plaintiff is similarly situated to other entities not affected by the law at issue.
Fraley v. United States Bureau of Prisons,
Plaintiffs equal protection claim is based on the assertion that, for the purposes of the amended ordinanсe, the entities that are similarly situated to it are those businesses that are eligible to obtain a permit to sell tobacco products in San Francisco, including general grocery stores, big box stores and other retailers. Plaintiff argues that Defendants treat these similarly situated entities differently because they revoked the permits to sell tobacco products only for those retailers who have a licensed pharmacy somewhere within their premises. Defendants contend that the presence of a pharmacy is insufficient to justify trеating different types of stores differently, and that this different treatment of the similarly situated entities has no rational basis. Defendants respond that the stores with and without pharmacies are not similarly situated because, when a store contains a pharmacy, it is participating in the health care delivery system, and participants in the health care delivery system should not be selling deadly tobacco products. Alternatively, Defendants argue that, even if the stores with pharmacies are similarly situated to stores without pharmacies, Defendants’ diffеrential treatment of the two is rationally related to the legitimate purposes of the amended ordinance.
Plaintiff points out that in Defendants’ brief in the
Walgreen
case, they made an argument similar to the one Plaintiff makes here. For instance, in their brief in the
Walgreen
case, Defendants stated that “the Board rationally concluded that society is far more likely to view drug stores as health-promoting institutions, as compared to big box stores or grocery stores. And that is true even if some big box stores and grocery stores happen to contain pharmacies.”
Walgreen,
Defendants explain that their original decision to focus on drug stores was an attempt to take one step at a time, addressing the phase of the problem that was most acute to the legislative mind. When the
Walgreen
court rejected this approach, they responded by addressing the entire problem, eliminating the differential treatment among types of stores with pharmacies. There is no inconsistency between Defendants’ statements in the
Walgreen
case and their stance here that no stores with pharmacies should be selling tobacco products and that stores with and without pharmacies are situated differently. Even if Defendants’ arguments were inconsistent, judicial estoppel does not apply be
Furthermore, even if Plaintiff is similarly situated to other retailers without pharmacies, the amended ordinance easily passes rational basis scrutiny. The purpose of the amended ordinance, to promote the public health by preventing people from becoming addicted to tobacco and by helping those already addicted to stop smoking, is legitimate and even compelling. In prohibiting the sale of tobacco products in pharmacies, the amended ordinance accomplishes its purpose by ending any inference that tobacco products may not be harmful because they are sold by a major participant in the health care delivery system.
Defendants’ motion to dismiss Plaintiffs equal protection claim is granted. Dismissal is without leave to amend because no additional allegations would cure the deficiency noted above.
IV. Substantive Due Process Claim Under Fourteenth Amendment
In this cause of action, Plaintiff alleges that: “The arbitrary and capricious classification of these other parts of Safeway’s stores as ‘pharmаcies’ is a denial of Safeway’s due process rights under the 14th Amendment to the United States Constitution and Article I, § 7 of the California Constitution.” Comp, at ¶ 91. In its opposition to Defendants’ motion, Plaintiff states that this claim is premised on: (1) the differential treatment of Plaintiffs stores and grocery stores without pharmacies and (2) the substantive due process right to be free from arbitrary, wrongful governmental actions that are not sufficiently linked to any legitimate state interest.
Plaintiffs first argument is a restatement of its equal protection claim, addressed above in sectiоn III. Plaintiffs second argument is a restatement of its substantive due process claim, addressed above in section II. In those sections, the Court analyzed these claims and dismissed them without leave to amend. Therefore, Plaintiffs fourth cause of action also is dismissed without leave to amend.
V. Preemption by State Regulation of Pharmacy Profession
In its complaint, Plaintiff alleges that the amended ordinance is preempted by state laws regulating the pharmacy profession and the sale of tobacco products. As Defendants note, in its opposition, Plaintiff abandons its preemption claim basеd on the regulation of tobacco products. Therefore, this claim is dismissed.
Plaintiff argues that the amended ordinance is preempted by state regulation of the pharmacy profession in three ways: (1) it seeks to regulate pharmacies with another level of administrative control; (2) it is based on the irrational hypothesis that a state pharmacy license assures the public that tobacco products for sale in any store containing a pharmacy are safe; and (3) it creates an actual or potential hazard or confusion in the mind of the public about the meaning of a pharmacist’s license. Plaintiff cites cases for the proposition that a municipality may not impose additional or more stringent requirements upon professionals licensed by the state.
See e.g., Verner, Hilby and Dunn v. City of Monte Sereno,
The amended ordinance does not regulate the pharmacy profession; it regulates retail stores by prohibiting those stores from selling tobacco if a pharmacy is located within them. This is proper because state law allows local governments to enact ordinances regulating the distribution and sale of tobacco products within their
Therefore, Plaintiffs preemption claim must be dismissed. It is dismissed without leave to amend because amendment would be futile.
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss is granted. Dismissal is with prejudice, without leave to amend. The Clerk shall enter judgment in favor of Defendants. Each party shall bear its own costs.
IT IS SO ORDERED.
Notes
. The amicus brief is based on evidence that the Court cannot consider on a motion to dismiss. Therefore, the Court does not address the arguments presented in it.
. Both parties submit requests for judicial notice of certain documents. Under Rule 201 of the Federal Rules of Evidence, a court may take judicial notice of facts that are not subject to reasonable dispute because they are either generally known or capable of accurate and ready determination. A court also may properly look beyond the complaint to matters of public record.
Mack v. South Bay Beer Distributors, Inc.,
. Article I, § 7 of the California Constitution provides that a person may not be deprived of life, liberty, or property without due process of law or denied equal protection of the laws.
. Two of Plaintiff's cases, Dobbins v. Los Angeles and Nollan v. California Coastal Commission, address the constitutional prohibition against taking property without just compensation, not the substantive due process right that Plaintiff is asserting.