In response to America’s and New York’s growing concern about obesity, New York City enacted § 81.53 of the New York City Health Code on September 13, 2012. Specifically, this city ordinance sought to limit the container size of sugary drinks to 16 ounces. It provided that “[a] food service establishment may not sell, offer, or provide a sugary drink in a cup or container that is able to contain more than 16 fluid ounces” and that “[a] food service establishment may not sell, offer, or provide to any customer a self service cup or container that is able to contain more than 16 fluid ounces.” N.Y. City Health Code §81.53. Legislators hoped that this “Portion Cap Rule” would “address the super-size trend and reacquaint New Yorkers with smaller portion sizes, leading to reduction in consumption of sugary drinks.” N.Y. Statewide Coalition of Hispanic Chamber of Commerce, et al. v. The New York City Department of Health and Mental Hygiene, et al., Case No. 653584/12, at slip op. 5 (N.Y Sup. Ct, N.Y. County, Mar. 11, 2013).
Industry groups and unions subsequently challenged this Portion Cap Rule after its passage and sought to enjoin and permanently restrain New York City from enacting it. These interested parties argued that the Portion Cap Rule was “an exercise in futility on practical and science based grounds,” and that the New York City Health Department “exceeded [its] authority and impermissibly trespassed on legislative jurisdiction” when it passed the ordinance. (slip op. 9-10).
Siding with the industry groups and unions, on March 11, 2013, the New York Supreme Court held that the ordinance was invalid, unconstitutional, and arbitrary and capricious and permanently enjoined the city from enacting the Portion Cap Rule just hours before it was set to take effect.
In its opinion, the court first assessed whether the Portion Cap Rule violated the separation of powers doctrine outlined by the seminal case, Boreali v. Axelrod, 71 N.Y.2d 1 (1987) (slip op. 13). Under Boreali, the court must evaluate the law, and whether it violates the separation of powers doctrine, using the following factors:
- Whether the challenged regulation is based upon concerns not related to the stated purpose of the regulation, i.e., is the regulation based on other factors such as economic, political or social concerns?;
- Was the regulation created on a clean slate thereby creating its own comprehensive set of rules without the benefit of legislative guidelines?;
- Did the regulation intrude upon ongoing legislative debate? In other words, did the regulation address a matter the legislation has discussed, debated or tried to address prior to this regulation?; and
- Did the regulation require the exercise of expertise or technical competence on behalf of the body passing the legislation? (slip op. 13).
The court found that the Portion Cap Rule violated the first three Boreali factors, but that it satisfied the fourth. Regarding the first factor, the court determined that the Portion Cap Rule “[wa]s laden with exceptions based on economic and political concerns.” (slip op. 15). The court also found that the legislation was created on a “clean slate” because “one thing not seen in any Board of Health’s powers is the authority to limit or ban a legal item under the guise of ‘controlling chronic disease,’ as it attempted to do in the Portion Cap Rule.” (slip op. 27). In evaluating the third factor, the court held that “[a]ddressing the obesity issue as it relates to sugar-sweetened drinks, or sugary drinks, is the subject of past and ongoing debate within the City and State legislatures . . .” and that the Portion Cap Rule “usurped a legislatively mandated function.” (slip op. 31). Ultimately, the court confirmed that the ordinance clearly violated the separation of powers doctrine:
The Portion Cap Rule, if upheld, would create an administrative Leviathan and violate the separation of powers doctrine . . . The rule would not only violate the separation of powers doctrine, it would eviscerate it. Such an evisceration has the potential to be more troubling than sugar sweetened beverages.
(slip op. 34-5).
Next, the court addressed whether the Portion Cap Rule had a rational basis as defined under New York law. Under the applicable rational basis test, the court evaluated whether the rule was “reasonable” and whether it was “arbitrary and capricious.” While the court found that the ordinance was reasonable, it held that it was arbitrary and capricious because:
it applies to some but not all food establishments in the City, it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories on suspect grounds, and the loopholes inherent in the Rule, including but not limited to no limitations on re-fills, defeat and/or serve to gut the purpose of the Rule.
(slip op. 34).
In light of the recent increase in food litigation and food regulation (especially in California), this is a welcomed opinion for food and beverage manufacturers, retailers and trade organizations. For the time being, Big Gulps can roam the streets of New York City, but the question is for how long?