Daniels Sharpsmart, Inc., a Delaware corporation, Plaintiff-Appellee,
v.
Karen Smith, Director of the California Department of Public Health, in her official capacity; Richard Pilorin, Chief of the Emergency, Restoration and Waste Management Section of the California Department of Public Health, in his personal capacity; Alison Dabney, Chief Senior Environmental Scientist for the Medical Waste Management Program of the California Department of Public Health, in her personal capacity; Ginger Hilton, Environmental Scientist for the Medical Waste Management Program of the California Department of Public Health, in her personal capacity, Defendants-Appellants.
Argued
and Submitted April 11, 2018 San Francisco, California
Appeal
from the United States District Court for the Eastern
District of California Lawrence J. O'Neill, Chief
District Judge, Presiding D.C. No. 1:17-cv-00403-LJO-SAB
Renu
R. George (argued) and Karli Eisenberg, Deputy Attorneys
General; Ismael A. Castro, Supervising Deputy Attorney
General; Julie Weng-Guetierrez, Senior Assistant Attorney
General; Xavier Becerra, Attorney General; Office of the
Attorney General, Sacramento, California; for
Defendants-Appellants.
Jason
Levin (argued), Steptoe & Johnson LLP, Los Angeles,
California; Douglas D. Janicik, Phoenix, Arizona; for
Plaintiff-Appellee.
Before: Sidney R. Thomas, Chief Judge, Ferdinand F. Fernandez
and Ronald M. Gould, Circuit Judges.
SUMMARY[*]
Preliminary
Injunction / Qualified Immunity
The
panel affirmed the district court's grant of a
preliminary injunction enjoining California Department of
Public Health officials from enforcing the California Medical
Waste Management Act ("MWMA") against Daniels
Sharpsmart, Inc., and reversed the denial of Department
officials' motion to dismiss on the basis of qualified
immunity.
The
panel held that Daniels will likely succeed on the merits of
its claim that the Department officials' application of
the MWMA constituted a per se violation of the dormant
Commerce Clause. The panel affirmed the district court's
decision that Daniels was likely to succeed on its claim that
California cannot reach out and impose its notions of the
proper way to dispose of medical waste upon those who are
conducting disposal activities in other states in accordance
with the laws of those states. The panel concluded that the
district court did not abuse its discretion when it issued
the preliminary injunction.
The
panel held that the doctrine of qualified immunity protected
Department officials Richard Pilorin, Alison Dabney, and
Ginger Hilton from damages liability where Daniels'
constitutional rights under the dormant Commerce Clause were
not clearly established at the time of the violation.
OPINION
FERNANDEZ, Circuit Judge
California
Department of Public Health[1] officials, Karen Smith,
[2]
Richard Pilorin, [3] Alison Dabney, [4] and Ginger
Hilton[5] (collectively "the Department
officials") appeal the district court's grant of a
preliminary injunction against them in favor of Daniels
Sharpsmart, Inc. ("Daniels") and the denial of
their motion to dismiss on the basis of qualified
immunity.[6] The preliminary injunction enjoined the
Department officials from enforcing the California Medical
Waste Management Act ("MWMA")[7] against Daniels
for the manner in which it disposed of medical waste at
facilities outside of the State of California. In its action
against the Department officials, [8]Daniels alleged that they
violated its constitutional rights under the dormant Commerce
Clause[9] when they engaged in extraterritorial
enforcement of the MWMA. The Department officials also appeal
the district court's denial of their motion to dismiss on
the basis of qualified immunity. We affirm the grant of the
preliminary injunction, but reverse the denial of qualified
immunity.
BACKGROUND
Daniels
is an Illinois based corporation that designs, develops,
manufactures, markets, and sells reusable sharps container
systems for the disposal of needle-inclusive biohazardous
medical products. Those medical products include waste
syringes, blood collection devices, and IVs. Daniels also
handles the transport and treatment of the medical waste. In
California, that waste is handled by Daniels' Medical
Waste Treatment Facility and Transfer Station in Fresno. As a
medical waste treatment facility in California, it is subject
to regulation under California's MWMA. Therefore, when it
received its medical waste treatment facility and transfer
station permit from the Department, Daniels agreed to
"comply with all applicable provisions of the Medical
Waste Management Act." Daniels also agreed to operate
its facility in conformance with the plans approved by the
Department.
In
general, under the MWMA, California-generated medical waste
must be incinerated. See Cal. Health & Safety
Code § 118215(a)(1)(A), (a)(3)(A). Furthermore,
"[m]edical waste transported out of state shall be
consigned to a permitted medical waste treatment facility in
the receiving state." Id. § 118000(c).
As of
2014, there were no locations within the State of California
that had incinerators to treat Daniels' biohazardous
medical waste.[10] Consequently, Daniels transported the
waste from the Fresno facility to other states. For some
time, Daniels had the waste incinerated at a facility in
Baltimore, Maryland.
However,
in 2014, Daniels decided to transport its medical waste to
locations in Kentucky and Indiana, where the waste would be
treated by means other than incineration which were
consistent with those states' regulations. In Kentucky,
the waste was treated by a method called autoclave, while in
Indiana the waste was treated by a technique known as thermal
deactivation. Treating the waste in Indiana and Kentucky was
more cost effective for Daniels than having the waste
incinerated in some other state. From September 11, 2014, to
December 1, 2014, Daniels transported roughly 320, 000 pounds
of medical waste to facilities in Indiana and Kentucky. After
a November 20, 2014, inspection of Daniels' facility in
Fresno, California, the Department, through Hilton, told
Daniels that all biohazardous medical waste originating in
California must be treated by incineration, even if the law
of another state permitted an alternative method. The
Department further indicated that Daniels would be penalized
if it did not incinerate all of its biohazardous medical
waste. Daniels responded that the Department could not
dictate the method by which Daniels treated the waste outside
of California.
On
April 10, 2015, the Department conducted another inspection
of Daniels' facility, and Daniels received a letter from
Hilton, which stated that California law governed
Daniels' treatment of medical waste in other states.
Then, on August 10, 2015, the Department issued a notice of
violation to Daniels for using methods other than
incineration to treat its biohazardous medical waste outside
of California. The notice imposed a $618, 000 penalty for the
618 violations of law it identified. In order to avoid
further penalties, Daniels began transporting its medical
waste to incinerators located in other states, at a
significantly higher cost to Daniels.
In
addition, Daniels filed a complaint in the district court,
and alleged that the Department officials violated the
dormant Commerce Clause by their extraterritorial application
of the MWMA. Daniels then filed a motion for preliminary
injunction, and the Department officials, claiming
entitlement to qualified immunity, filed a motion to dismiss.
The
district court granted Daniels' motion for a preliminary
injunction and denied the Department officials' ...