United States District Court, D. Arizona
DAVID G. CAMPBELL, District Judge.
Defendant City of Phoenix has passed an ordinance regulating pet stores ("the Ordinance"). Under the Ordinance, pet stores may not sell dogs or cats obtained from persons or companies that breed animals. Pet stores may sell only animals obtained from animal shelters or rescue organizations. Puppies N Love operates a pet store in Phoenix that sells purebred dogs obtained from out-of-state breeders. Puppies N Love and its owners have sued the City, claiming primarily that the Ordinance violates the dormant Commerce Clause of the United States Constitution by closing the Phoenix market to out-of-state breeders and giving an economic advantage to local breeders. The parties, including Intervenor Humane Society of the United States ("HSUS"), have filed motions for summary judgment (Docs. 143, 147, 151), and the Court heard oral argument on July 10, 2015. For the reasons that follow, the Court will deny Plaintiffs' motion and grant the motions of the City and the HSUS.
A. Federal Regulation of Animal Breeders.
The federal government regulates the treatment of animals through the Animal Welfare Act ("AWA"), which sets standards for the treatment of certain animals that are bred for sale, exhibited to the public, used in biomedical research, or transported commercially. See 7 U.S.C. §§ 2131-59. As relevant here, the AWA regulates the activities of most breeders of dogs by requiring them to have a license before selling their animals. 9 C.F.R. § 2.1(a). A breeder becomes eligible for a license by agreeing to follow specified standards for caring for animals. Id. § 2.2(a). These standards include housing dogs in appropriate enclosures (9 C.F.R. § 3.1), regularly exercising them (§ 3.8), feeding them once a day (§ 3.9), and reducing pest contamination in animal areas (§ 3.11). The United States Department of Agriculture ("USDA") enforces the AWA by inspecting breeders and imposing penalties for violations. 7 U.S.C. §§ 2147, 2149.
Some believe that the AWA does not adequately protect dogs. See, e.g., Doc. 148-1 at 213-14. They argue that lax enforcement and poor standards have led to a proliferation of "puppy mills" where dogs are bred in large numbers and inhumane conditions. See Doc. 148 at 4-5. The HSUS has stated that the "AWA allows dogs to be kept in cramped, wire-floored cages for their entire lives, churning out litter after litter of puppies for the commercial pet trade." Doc. 137-23 at 5. In 2010, the Inspector General of USDA similarly found that enforcement of the AWA "was ineffective in achieving dealer compliance with [the] AWA and regulations[.]" Doc. 148-1 at 422. The Inspector General reported that inspectors had found dogs cared for by USDA-licensed breeders that were walking on injured legs, suffering from tick-infestations, eating contaminated food, and living in unsanitary conditions. Id. at 432-42. Since 2010, the USDA has worked to improve enforcement of the AWA. See Doc. 157-12 at 19-20.
B. The Ordinance.
Many states and municipalities have decided to impose stricter standards on animal breeders and pet stores. See Doc. 157, ¶¶ 10-14. Missouri, where a large number of USDA-licensed breeders are located, requires breeders to keep dogs in large and impervious cages, provide regular opportunities for outdoor exercise, and provide comprehensive annual veterinary exams. See Mo. Rev. Stat. § 273.345; see also Doc. 137-1 at 16-18. Indiana, Iowa, Oklahoma, and Texas have passed similar laws. See Doc. 157, ¶¶ 10-14. Although not directly regulating animal breeders, Arizona has passed a law regulating retail pet stores. See A.R.S. §§ 44-1799 et seq. Under this law, pet stores must adequately care for their animals and ensure the good health of animals before selling them. Id.
In recent years, cities such as Austin, Chicago, Los Angeles, Miami, and San Diego have passed ordinances prohibiting pet stores from selling dogs obtained from certain types of breeders. See Krysten Kenny, A Local Approach to A National Problem: Local Ordinances As A Means of Curbing Puppy Mill Production and Pet Overpopulation, 75 Alb. L. Rev. 379, 379 (2012). The HSUS is a proponent of these ordinances. Doc. 137-23 at 5-12. The HSUS believes that because many pet shops sell dogs obtained from puppy mills, governments should limit pet shops to selling dogs obtained from animal shelters. Id. On December 18, 2013, with encouragement from the HSUS, Phoenix joined the other cities in passing a pet-store ordinance. Doc. 136-1 at 2-6. The Ordinance is entitled "[p]rohibition on sale of dogs or cats" and states:
A. No pet shop or pet dealer shall display, sell, deliver, offer for sale, barter, auction, give away, broker or otherwise transfer or dispose of a dog or cat except for a dog or cat obtained from:
1. An animal shelter;
2. A private, nonprofit humane society or nonprofit animal rescue organization; or
3. An animal shelter, nonprofit humane society or nonprofit animal rescue organization that operates out of or in connection with a pet shop.
* * *
C. This section does not apply to:
1. A person or establishment, other than a pet shop or pet dealer, which displays, sells, delivers, offers for sale, barters, auctions, gives away, brokers or otherwise transfers or disposes of only dogs and cats that were bred and reared on the premises of the person or establishment;
2. An animal shelter;
3. A private, nonprofit humane society or nonprofit animal rescue organization; or
4. An animal shelter, nonprofit humane society or nonprofit animal rescue organization that operates out of or in connection with a pet shop.
D. Nothing in this section shall prevent a pet shop or pet dealer from providing space and appropriate care for animals owned by an animal shelter, nonprofit humane society or nonprofit animal rescue agency and maintained at a pet shop for the purpose of adopting those animals to the public.
Doc. 136-1 at 2-6. The Ordinance also requires pet shops to maintain records "listing the source of all dogs or cats under their ownership, custody or control." Id. at 5.
In sum, the Ordinance prevents pet shops from selling animals obtained from commercial breeders. Pet shops may sell animals obtained only from shelters and rescue organizations. Breeders and animal shelters within the City may, however, continue selling directly to customers.
C. City of Phoenix Pet Market.
In Maricopa County, which encompasses Phoenix and other cities, the Maricopa County Animal Care and Control organization ("MCACC") shelters unwanted dogs and cats. Doc. 148-1 at 241-42. In 2014, MCACC took in 38, 235 animals, almost 34, 000 of which were dogs. Id.; Doc. 157-42 at 5. MCACC found new homes for 11, 382 of these animals, euthanized 10, 160, and returned 4, 183 to their original owners. Doc. 157-42 at 5. MCACC also transferred 12, 129 of these animals to other animal rescue organizations through its New Hope program. Doc. 157-43 at 2. Partners in the New Hope Program include the Arizona Humane Society and the Arizona Animal Welfare League. Doc. 148-1 at 243. MCACC and other rescue organizations believe that the Ordinance will reduce animal homelessness and result in more adoptions. Id. at 245-47.
Many breeders located in the City of Phoenix offer pets for sale and often advertise through the internet. Doc. XXX-XX-XX. Some of these breeders are commercial operations. Others may be described as "backyard breeders" with little experience and low standards for dog breeding. Doc. 152-1 at 17; Doc. 137-24 at 23. Out-of-state breeders also sell dogs to Phoenix residents, either through the internet or local pet stores. Almost all of these breeders believe that there are disadvantages in selling pets through the internet. See Doc. 137-36 at 20, 25, 31, 35. Not only are there costs associated with advertising on the internet, but sales can be difficult to make. Customers may suspect that internet dealers are fraudulent. See id. at 9-10, 16. More importantly, customers want to interact with an animal before buying it as a pet. Id. at 21, 26, 32, 36. For that reason, out-of-state breeders rely on local pet stores like Puppies N Love to sell their dogs to Phoenix residents. Id. As one Arkansas breeder put it: "Without access to a local pet store in Phoenix, I would be unable to compete with local breeders, who would have preferential access to local residents by virtue of their physical location in or near the city." Id. at 20.
D. Puppies N Love.
The Ordinance will have a significant impact on Puppies N Love, which operates the only pet store in Phoenix that sells commercially-bred dogs. Doc. 152-1 at 8-9; Doc. 137-6 at 9. Puppies N Love sells purebred puppies to the public at the Paradise Valley Mall, as well as other locations outside of the City of Phoenix. Doc. 137-6 at 28, 43. The store advertises itself as promoting "the highest standards in animal welfare by committing ourselves 100% to the puppies in terms of their health, safety and well-being[.]" Id. at 44. Puppies N Love buys puppies from commercial breeders, almost all of which are located out-of-state. Doc. 157, ¶ 134; Doc. 167-1 at 3. Local breeders provide too few puppies and, according to the store's owners, lack the professionalism of breeders from the Midwest. Id. at 4. The store sells approximately 500 puppies each year. Doc. 152-1 at 32.
Puppies N Love asserts that it does not buy from puppy mills. Doc. 137-6 at 28. Rather, the store buys puppies only from USDA-licensed breeders and hobby breeders that have four or fewer breeding females. Id. If a breeder is reported to have one direct or three indirect violations of USDA standards, Puppies N Love states that it will not do business with that breeder. Id.; Doc. 137, ¶ 14. The store has a full-time employee who ensures that the breeders are "providing excellent and loving conditions in which dogs are bred and raised." Doc. 137-6 at 28.
Despite these policies, Puppies N Love has done business with at least three breeders who have had direct violations of USDA standards. Doc. 137, ¶ 21. One of these breeders arguably is a prototypical puppy mill. Doc. 148 at 6-12. This breeder breeds female dogs every six to twelve months, keeps dogs in small enclosures without solid flooring, and has at most six employees to take care of approximately 700 dogs. Id. at 6-7. Although Puppies N Love disputes this characterization and argues that the breeder has a good business reputation (Doc. 157, ¶¶ 72-88), the store no longer buys from him and others who have directly violated USDA standards (Doc. 137, ¶¶ 21-22, Doc. 157-22 at 77).
Frank and Vicki Mineo own and operate Puppies N Love. Doc. 137-6 at 28, 36. Because Puppies N Love does not buy dogs from animal shelters, they believe that the Ordinance will force them to close their store in Phoenix. Id. at 29-30, 37-38. They considered the possibility of selling dogs from shelters, but found that it is not economically feasible. Id. at 30. They believe that they could not compete on a for-profit basis with subsidized shelters and humane societies that provide the same dogs for free or a minimal price. Id. at 29; Doc. 11-1 at 13. The Mineos and Puppies N Love therefore brought suit against the City, claiming that the Ordinance violates the dormant Commerce Clause, the Equal Protection Clause, and the Arizona Constitution's prohibition on special laws. Doc. 1. They also claim that the Ordinance is preempted by A.R.S. § 44-1799 and is unconstitutionally vague. The HSUS subsequently was permitted to enter the case as an intervenor. Doc. 37.
On April 2, 2014, the Court granted Plaintiffs' request for a preliminary injunction. Doc. 41. The Court found that the balance of hardships tipped sharply in Plaintiffs' favor and that the existence of serious merits questions warranted preliminary injunctive relief. Id. (citing Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011)).
II. Interpretation of the Ordinance.
The Ordinance is not a model of clarity. It states that "pet shops" may sell only animals obtained from animal shelters and nonprofit rescue organizations. Id. at 5. This much is clear, but the Ordinance's exception for breeders is less so. It provides that "[a] person or establishment, other than a pet shop or pet dealer, " may sell "dogs and cats that were bred and reared on the premises of the person or establishment." Id. at 5-6. But if a person or establishment sells dogs and cats that are kept on-site, then that person or establishment would fall within the Ordinance's definition of a pet shop: "any establishment at which are kept for sale any animals generally considered to be household pets, but excluding kennels or livery stables." Doc. 136-1 at 4. Thus, the breeder exception - that "a person or establishment, other than a pet shop, " may sell dogs and cats that are bred onsite - could be viewed as meaningless because the instant a person or establishment sells dogs and cats that are kept on-site it becomes a pet shop not allowed to sell these animals. The only meaningful reading of these provisions is that establishments selling dogs and cats that are bred on-site are breeders, regardless of the definition of pet shop, and may sell the animals. Otherwise, the exemption for breeders would be meaningless, an interpretation the Court should avoid. See Mejak v. Granville, 136 P.3d 874, 876 (Ariz. 2006) ("[Courts] must interpret the statute so that no provision is rendered meaningless, insignificant, or void.").
III. Legal Standards.
A. Summary Judgment.
Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Summary judgment is also appropriate against a party who "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment, and the disputed evidence must be "such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When presented with cross-motions for summary judgment, "the court must consider each party's evidence, regardless under which motion the evidence is offered." Las Vegas Sands, LLC v. Nehme, 632 F.3d 526, 532 (9th Cir. 2011).
B. Dormant Commerce Clause.
The Commerce Clause grants Congress the power to "regulate Commerce... among the several States[.]" U.S. Const. art. I, § 8, cl. 3. The Clause also contains a "negative' aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce." Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality of State of Or., 511 U.S. 93, 98 (1994). This negative aspect has come to be known as the "dormant Commerce Clause." Dep't of Revenue of Ky. v. Davis, 553 U.S. 328, 337 (2008). Courts "analyze dormant Commerce Clause claims using the Supreme Court's two-tiered approach." Pharm. Research & Mfrs. of Am. v. Cnty. of Alameda, 768 F.3d 1037, 1041 (9th Cir. 2014). "The first tier asks whether the Ordinance either discriminates against or directly regulates interstate commerce.'" Id. (quoting Greater L.A. Agency on Deafness, Inc. v. Cable News Network, Inc., 742 F.3d 414, 432 (9th Cir. 2014)). If so, the Ordinance is subject to strict scrutiny - a "virtually per se rule of invalidity[.]" City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978). The ...