Just Brands LLC v. Fla. Dep't of Agric. & Consumer Servs.

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JUST BRANDS LLC, Plaintiff, v. FLORIDA DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES and WILTON SIMPSON, in his official capacity as Florida Commissioner of Agriculture, Defendants.

No. 23-62081-CIV-WILLIAMS/HUNT

United States District Court, S.D. Florida, Fort Lauderdale Division

December 1, 2023

THE HONORABLE KATHLEEN M. WILLIAMS

REPORT AND RECOMMENDATION

PATRICK M. HUNT, UNITED STATES MAGISTRATE JUDGE

This matter is before this Court on Plaintiff's Renewed Motion for Injunctive Relief (TRO) (“Motion”). ECF No 24. The Honorable Kathleen M. Williams referred this Motion to the undersigned United States Magistrate Judge. ECF No 25; see also 28 U.S.C. § 636; S.D. Fla. L.R Mag. R. 1. The undersigned held an evidentiary hearing on November 28, 2023. Having thoroughly and carefully reviewed the Motion, the Response, the Reply, and the applicable law, having heard the arguments of counsel, and being otherwise fully advised in the premises, the undersigned RECOMMENDS Plaintiff's Motion be DENIED.

LEGAL STANDARD

Plaintiff brought this action to defend its constitutional rights and challenge the State's authority to impose stop-sale orders prohibiting Plaintiff from selling hemp-derived gummy candies in shapes and colors attractive to children in out-of-state markets. There are four necessary elements that must be shown to justify the issuance of a preliminary injunction or a TRO:

(1) [that there is] a substantial likelihood of success on the merits;

(2) that irreparable injury will be suffered if the relief is not granted;

(3) that the threatened injury outweighs the harm the relief would inflict on the non-movant; and

(4) that the entry of the relief would serve the public interest.

Schiavo ex. rel Schindler v. Schiavo, 403 F.3d 1223, 1225-26 (11th Cir. 2005). “A preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly established] the burden of persuasion as to each of the four prerequisites.” Four Seasons Hotels and Resorts, B.V. v. Consorcio Barr, S.A., 320 F.3d 1205, 1210 (11th Cir. 2003) (alterations, quotations, and citations omitted).

DISCUSSION

In its Renewed Motion, Plaintiff makes the same arguments as in its previous motion-the Florida Department of Agriculture and Consumer Services (“Defendant”) has infringed on Plaintiff's constitutional rights under the Commerce Clause by prohibiting Plaintiff from selling its hemp-derived gummy products outside the State of Florida.^[1]The statute at issue, Florida Statutes section 581.217(7)(e), regulates the distribution and retail sale of hemp extract and hemp-derived products, and the statute was recently amended^[2] to specifically include the prohibition of those products that are potentially attractive to children:

(3) Definitions.--As used in this section, the term:

(a) “Attractive to children” means manufactured in the shape of humans, cartoons, or animals; manufactured in a form that bears any reasonable resemblance to an existing candy product that is familiar to the public as a widely distributed, branded food product such that a product could be mistaken for the branded product, especially by children; or containing any color additives. ...

(7) Distribution and retail sale of hemp extract.-...

(e) Hemp extract distributed or sold in violation of this subsection is subject to s. 500.172 and penalties as provided in s. 500.121. Hemp extract products found to be mislabeled or attractive to children are subject to an immediate stop-sale order.

§ 581.217(3)(a) and § 581.217(7)(e), Fla. Stat. (2023).

Plaintiff contends Defendant has issued stop-sale orders in reliance on an overbroad interpretation of the statute and has improperly prevented Plaintiff from selling products in out-of-state markets that do not have similar guidelines.^[3] Plaintiff asserts this has caused irreparable injury to its business through a loss of the market share, customers, revenue, and goodwill.

The undersigned addresses the arguments as to each element of the TRO in turn below.

(1) There is a substantial likelihood of success on the merits.

Plaintiff's arguments hang on Defendant purportedly violating Plaintiff's constitutional rights under the Commerce Clause. The Dormant Commerce Clause prohibits “regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273 (1988). “To determine whether a regulation violates the Dormant Commerce Clause, we apply one of two levels of analysis.” Island Silver & Spice, Inc. v. Islamorada, 542 F.3d 844, 846 (11th Cir. 2008). “[T]he two ways a law can violate the dormant Commerce Clause are (1) by discriminating against interstate commerce or (2) by unduly burdening interstate commerce.” Fla. Transp. Servs., Inc. v. Miami-Dade Cnty., 703 F.3d 1230, 1244 (11th Cir. 2012).

In the first test, we consider whether the regulation directly discriminates against interstate commerce or favors in-state economic interests. If the regulation does either, it is invalid unless it “advance[s] a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Islamorada, 542 F.3d. at 846 (quoting Bainbridge v. Turner, 311 F.3d 1104, 1109 (11th Cir. 2002)). This Court finds Section 581.217(7)(e) does not directly discriminate against Plaintiff's business as the law “does not effect ‘simple protectionism,' but ‘regulates evenhandedly' by prohibiting all . . . retailers from selling their products . . . without regard to whether the [product], the containers, or the sellers are from outside the State.” Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 471-72 (1981). The statute prohibits Plaintiff, as well as all similar sellers, from distributing or selling hemp-based gummy products that are attractive to children.

“[I]f the law or regulation advances a legitimate local interest and has only indirect effects on interstate commerce,” we move on to the second test of the analysis that requires the application of the balancing test from Pike v. Bruce Church, Inc., 397 U.S. 137 (1970). Fla. Transp. Servs., 703 F.3d at 1244. The Pike balancing test provides that “[w]here the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike, 397 U.S. at 142. “Under this test, we must first determine whether ‘a legitimate local purpose' for [the regulation] exists,” and, if it does, “we weigh the local benefits of enforcing the statute against the burdens imposed on interstate commerce.” Norwegian Cruise Line Holdings Ltd v. State Surgeon Gen., Florida Dep't of Health, 50 F.4th 1126, 1142 (11th Cir. 2022). This Court can invalidate a statute “[o]nly if the burdens on interstate commerce clearly exceed the local benefits.” Id. (citing Fla. Transp. Servs., 703 F.3d at 1244).

“[A] State's power to regulate commerce is never greater than in matters traditionally of local concern.” Kassel v. Consol. Freightways Corp., 450 U.S. 662, 670, (1981) (plurality opinion). Statutes that “touch upon safety” have traditionally remained in place as under the State's power to regulate. Norwegian Cruise Line, 50 F.4th at 1144 (quoting Kassel, 450 U.S. at 670). Where the “safety justifications are not illusory, the Court will not second-guess legislative judgment about their importance in comparison with related burdens on interstate commerce.” Id.

At this stage in the proceedings, it would appear the State of Florida may have acted within its power to regulate commerce by placing a restriction on the sale and distribution of hemp-based gummies that are attractive to children. It is not a universal ban. In that respect, the burden the State has placed on interstate commerce is relatively minor because it allows hemp-based gummies to be sold and distributed across state lines as long as those gummies do not look like candy that is attractive to children. Clover Leaf, 449 U.S. at 472. The State has asserted an arguably legitimate local interest in imposing safety measures on items that may entice children.

Plaintiff also attempts to argue the statute applies solely to sales of violative products and not their distribution. Because it is selling only to out-of-state buyers, Plaintiff argues, it is complying with the statute. However, the plain language of the statute appears to contemplate and prohibit distribution and movement of such products within the State of Florida, not just their sale. Against this factual and legal background, the undersigned finds Plaintiff has not met the heavy burden on the first element to show a substantial likelihood of success on its claim.

(2) Irreparable injury will be suffered if the relief is not granted.

As to the second element, Plaintiff asserts it will suffer irreparable harm without the imposition of a preliminary injunction because Defendant's actions are having a detrimental effect on Plaintiff's business and causing a loss of customers, goodwill, and a share in out-of-state markets not subject to the same restrictions. “The basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies.” Ne. Florida Chapter of Ass'n of Gen. Contractors of Am. v. City of Jacksonville, Fla., 896 F.2d 1283, 1285 (11th Cir. 1990). “The key word in this consideration is irreparable. Mere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay, are not enough.” Id. (quoting Sampson v. Murray, 415 U.S. 61, 90 (1974)).

An irreparable injury...