Daniels Sharpsmart, Inc., manufactures and markets reusable container systems for the disposal of medical waste (such as syringes and IVs), and handles disposal and treatment of such waste at a facility in Fresno. The California Medical Waste Management Act (“MWMA”) requires medical waste to be incinerated. In 2014, there were no incineration facilities for certain biohazardous waste in California, so Daniels transported medical waste to facilities in Kentucky and Indiana for disposal using autoclave and thermal deactivation procedures authorized in those states. Following an inspection of the Fresno facility, the California Department of Public Health found Daniels had violated the MWMA 618 times by disposing of medical waste without incinerating it, and imposed a $618,000 penalty. Daniels sued four state officials, seeking an injunction on the ground that applying the MWMA to disposal of medical waste in other states violated the dormant Commerce Clause. The officials asserted qualified immunity and moved to dismiss. The district court agreed with Daniels, rejected qualified immunity, and entered a preliminary injunction. The state officials appealed.

The Ninth Circuit affirmed in part, holding that the district court did not abuse its discretion by granting a preliminary injunction. The court explained that Daniels was likely to succeed on the merits; enforcing the MWMA to control out-of-state transactions involving medical waste would violate the dormant aspect of the Commerce Clause under the extraterritoriality doctrine. To the extent that Daniels sought money damages in addition to injunctive relief, the Ninth Circuit also held that three of the four state officials were entitled to qualified immunity because Daniels’ Commerce Clause rights were not sufficiently clearly established in this context.

This bulletin was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission.