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DENNIS J. HERRERA, State Bar #139669
City Attorney
WAYNE SNODGRASS, State Bar #148137
VINCE CHHABRIA, State Bar #208557
Deputy City Attorneys
City Hall, Room 234
1 Dr. Carlton B. Goodlett Place
San Francisco, California 94102
Telephone:
(415) 554-4674
Facsimile:
(415) 554-4699
E-Mail:
vince.chhabria@sfgov.org
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Attorneys for Defendants
CITY AND COUNTY OF SAN FRANCISCO, ET AL.
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SAN FRANCISCO
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UNLIMITED JURISDICTION
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WALGREEN CO., an Illinois corporation,
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Plaintiff,
vs.
THE CITY AND COUNTY OF SAN
FRANCISCO; THE BOARD OF
SUPERVISORS FOR THE CITY AND
COUNTY OF SAN FRANCISCO; and
GAVIN NEWSOM, in his capacity as
Mayor of the City and County of San
Francisco,
Case No. 479-553
MEMORANDUM OF POINTS AND
AUTHORITIES IN OPPOSITION TO
APPLICATION FOR A
PRELIMINARY INJUNCTION
Hearing Date:
Time:
Place:
September 30, 2008
9:30 a.m.
Dept. 301
Date Action Filed:
Trial Date:
September 8, 2008
Not Set
Defendants.
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TABLE OF CONTENTS
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TABLE OF AUTHORITIES
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INTRODUCTION
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This lawsuit represents Walgreen Company's hail-mary attempt to continue selling cigarettes
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to its pharmacy customers in San Francisco, despite the efforts of the American Pharmacists
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Association, the California Pharmacists Association, and the California Medical Association to stop
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it from doing so. Harkening back to the Lochner Era, Walgreens is asking the Court to place the
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company's financial interests ahead of the health of San Francisco's citizens. As set forth below,
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there is no legal basis for granting such a request.
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The company first argues that the City's ban on tobacco sales by stores with pharmacies
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violates its equal protection rights, because the ban excludes big box stores and grocery stores that
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also have pharmacies in them. However, under rational basis review, the Court must defer to the
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reasonable policy judgment of the experts. Dr. Mitchell Katz, San Francisco's leading expert on
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public health, set forth to the Board of Supervisors in great detail the rationale for distinguishing
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between drug stores and more general stores. Among other things, he explained that stores like
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Walgreens – which bills itself as "the pharmacy America trusts" – are understood by the public to
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be health-promoting businesses. The sale of tobacco by health-promoting businesses like
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Walgreens sends an implicit message that smoking is acceptable, almost as much as if a doctor's
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office or a hospital were to sell tobacco. And Dr. Katz explained that cigarette addiction by
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adolescents has declined over the years in large part due to governmental efforts, like this one, to
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undercut the message that smoking is acceptable.
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Dr. Katz also explained that the public does not similarly think of big box stores and grocery
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stores as health-promoting businesses. To be sure, the sale of cigarettes by these stores may also
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send an implicit message that smoking is acceptable, but the City's policymakers could rationally
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conclude that this message is stronger and more dangerous at drug stores like Walgreens. Under the
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rational basis test, policymakers are free to tackle problems one step at a time, focusing first on
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areas where the need for regulation is greatest.
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Walgreens also assumes, without analysis, that if there is no rational distinction between
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drug stores and more general stores, the Court must strike down the tobacco sales ban entirely.
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Perhaps this argument should not be surprising given the economic goals of this lawsuit, but it is
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completely wrong. The ordinance bans tobacco sales by retail stores with pharmacies, and it then
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excludes big box stores and grocery stores from that prohibition. And the ordinance has a
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severability clause. The exemption is clearly severable from the remainder of the ordinance.
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Accordingly, if the exemption were struck down on equal protection grounds, that would leave in
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place a ban on the sale of tobacco by all retail stores with pharmacies.
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Finally, Walgreens contends that the Board lacked authority under Proposition I to enact the
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ban because the Controller's Office did not prepare an economic impact report on the legislation.
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This argument ignores three key points: (1) the Controller's Office thoroughly reviewed the
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legislation and determined it would have no material impact on jobs, revenues or pricing, thereby
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obviating the need to prepare a report on those impacts; (2) even if the Controller's Office had
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violated its ministerial duty to prepare an economic impact report, Proposition I was not intended to,
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and does not purport to, preclude the Board from enacting measures before a report is prepared; and
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(3) even if the voters who enacted Proposition I, which is an initiative ordinance and not an
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amendment to the City Charter, had sought to shackle the Board whenever an unelected official
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fails or refuses to prepare an economic impact report, the initiative, so construed, would be an
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invalid attempt to infringe upon the Board's power to enact legislation in accordance with the
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procedures set forth in the Charter. The remedy for a failure of the Controller's Office to prepare an
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economic impact report would be a writ of mandate ordering it to do so, not an after-the-fact
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invalidation of legislation duly enacted by the Board pursuant to its authority under the Charter.
BACKGROUND
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Over the years, government – at the federal, state and local levels – has made progress in
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reducing the number of adolescents who take up smoking.1 This stems in no small part from
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governmental efforts to undercut the message that smoking is acceptable. For example, government
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Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Reports
(MMWRs) Cigarette Use Among High School Students—United States, 1991–2007, June 27, 2008,
Vol. 57, No. 25, available at
http://www.cdc.gov/tobacco/data_statistics/mmwrs/2008/mm5725a3_highlights.htm (visited Sept.
15, 2008).
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has banned television advertisements for cigarettes.2 It has funded anti-smoking campaigns.3 It has
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sued the tobacco industry for committing fraud upon its customers, and has insisted that the
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companies promote anti-smoking programs as part of the remedy.4 Government officials have even
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sought to educate Hollywood about the harmful effects of portraying smoking in a positive light. 5
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Of course, efforts to prevent adolescents and others from becoming addicts have been far
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from an unqualified success. Tobacco remains the leading cause of preventable death in the United
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States – an estimated 440,000 Americans die each year from diseases caused by smoking. 6
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Approximately 90 percent of smokers begin smoking before the age of 21, and it is estimated that at
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least 4.5 million U.S. adolescents are cigarette smokers.7 These adolescents are not just casual
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smokers; they are already addicted to nicotine. Of adolescents who have smoked at least 100
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cigarettes in their lifetime, most of them report that they would like to quit, but are not able to do
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so.8 Tobacco addiction is still a major public health crisis, and governments continue to struggle to
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find ways to prevent people from becoming addicted.
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San Francisco's new ordinance banning the sale of tobacco in drug stores is yet another
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governmental effort to prevent young people from becoming addicted to cigarettes. It is based on
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the opinions of groups like the American Pharmacists Association, the California Pharmacists
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Pub.L. No. 91-222, § 6, 84 Stat. 87 (1970).
See, e.g., Larry D. Hatfield, Teen smoking in steep decline, study shows. Drugs and alcohol
figures also down; education credited with turnaround, San Francisco Chronicle, December 19,
2001, at A1, available at http://www.sfgate.com/cgibin/article.cgi?f=/c/a/2001/12/19/MN108919.DTL&hw=government+funded+anti+smoking+campa
ign&sn=003&sc=797 (visited Sept. 16, 2008).
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"Master Settlement Agreement" (1998) National Association of Attorneys General, pg. 43,
available at http://www.naag.org/backpages/naag/tobacco/msa/msapdf/1109185724_1032468605_cigmsa.pdf (visited Sept. 16, 2008).
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Centers for Disease Control and Prevention. Tobacco Use, Access, and Exposure To
Tobacco in Media Among Middle and High School Students—United States, 2004. Morbidity and
Mortality Weekly Report [serial online]. 2005: 4(12);297–301 [cited 2006 Dec 5], available at
http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5412a1.htm (visited Sept. 15, 2008).
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American Lung Association, Adolescent Smoking Statistics, November 2003, available at
http://www.lungusa.org/site/pp.asp?c=dvLUK9O0E&b=39868 (visited Sept. 16, 2008).
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Id.
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Id.
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Association, and the California Medical Association that drug stores should not be selling tobacco,
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because when health-promoting businesses sell tobacco, it sends an implicit message that smoking
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is acceptable. See, e.g., Plaintiff's Request for Judicial Notice ("PRJN"), Exh. A at p. 2 (Ordinance
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No. 194-08, Finding No. 9).9 As Dr. Mitchell Katz, San Francisco's Director of Public Health,
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explained to the Board of Supervisors' Committee on City Operations and Neighborhood Services:
The fact is, that selling tobacco at pharmacies influences social acceptability
of smoking . . . When we think pharmacy, we think health. And so when we
see tobacco being sold, that's a mixed message. That mixed message may not
matter to the person who has made a decision to smoke. That person is
addicted to nicotine. But what about the teenager? What about the child?
For the person who sees the pharmacy as part of their health team, what does
it mean to see that the pharmacy sells tobacco? We know for a fact that if
you decrease the social acceptability of smoking it results in lower rates of
smoking. That's why we have lower rates of smoking now among teenagers
than we had 10 years ago. 'Cause we have done an effective job of saying
that, no, smoking unlike ads you saw once on TV and still now on billboards,
is not cool. It's not sexy. It's going to be something that could kill you. So
social acceptability is vitally important.
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Declaration of Rebecca Justice Lazarus in Support of Plaintiff's Application for Preliminary
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Injunction ("Lazarus Decl."), Exh. 1 at pp. 1-2.
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To underscore his point that the sale of tobacco by drugstores sends an implicit message that
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smoking is acceptable because of the trust the public places in these health-promoting stores, Dr.
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Katz showed the Committee a photograph of his local Walgreens pharmacy at the corner of
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California and Spruce Streets. See Declaration of Dr. Mitchell Katz in Opposition to Application
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for Preliminary Injunction, Exh. B at p. 5. The picture shows a large "Rx" towards the top of the
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building, a sign that says "Walgreens Pharmacy" towards the middle of the building, and another
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"Rx" sign next to that. And, just above the door where customers enter the store, there is a sign that
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says, "Walgreens: The Pharmacy America Trusts." Id.
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Dr. Katz used this picture not just to underscore his point that the sale of tobacco by drug
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stores sends an implicit message that smoking is acceptable; he also used it to respond to questions
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about the legislation's exclusion of big box stores and grocery stores:
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See also Defendants' Request for Judicial Notice ("DRJN"), Exh. A (Legislative Digest
citing numerous trade and journal articles for the proposition that tobacco sales by pharmacies sends
an implicit message that smoking is acceptable).
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So that's why, when people say, "hey, these stores are just like any retail
store," to me it's not convincing, because I don't want my children to see the
word "pharmacy," to meet my great pharmacist, and then to see tobacco.
Any more than I'd want a doctor's office to be selling tobacco, or a hospital to
be selling tobacco.
Lazarus Decl., Exh. 1 at p. 3.
Dr. Katz provided another reason why drug stores like Walgreens are different from typical
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retail stores: they are more likely to draw former smokers with illnesses – people who are more
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tempted by, and vulnerable to, the harmful effects of tobacco and who should not be exposed to it:
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Pharmacies don't draw the, the cross-section of people. They draw [more]
people who have chronic diseases. So people with asthma, people with
chronic obstructive pulmonary disease, cardiovascular disease. So they're
going to get their medicine, but they also can see right where they're paying,
there are, you know, tobacco being sold. So people whose diseases are made
worse by tobacco are now actually being brought into a store that sells it . . . .
At 12-step alcohol meetings you don't have an alcohol place where you can
buy. And that's for a specific reason.
Lazarus Decl., Exh. 1 at p. 3.
Dr. Katz made a similar presentation to the full Board. In explaining the exclusion for big
box stores and grocery stores, he captured the principle that when it comes to economic and social
welfare legislation, policymakers are free to address policy problems one step at a time:
As health director, of course, I'm not in favor of anybody smoking or
anybody selling tobacco. What I was trying to do in our work in fashioning
the legislation was focusing on that group where I thought the case was the
strongest. We all go to supermarkets. We all go to warehouse stores. They
get a cross section of people. We teach our children that supermarkets,
wholesale stores, they're places you go to buy everything. When it comes to
pharmacies, I feel that our children, our teenagers get a different message.
My son, even at six, knows that the Walgreens we go to is where we go to
pick up [my daughter] Roxy's asthma medicine. He knows that it's a
pharmacy . . . . What we're trying to say is these places market themselves as
health-promoting businesses. They're not Walgreens General Store. They're
not Rite Aid. They're Walgreens Pharmacy. They're Rite Aid Pharmacy.
The pharmacy America trusts. And so it sends a very different message.
Certainly in the future if we have success and I believe we would, just like
San Francisco was the leader [in the ban on smoking in restaurants] . . . that
you will want to take on a broadening of this legislation at some future date.
What we focus on [is] that group we thought was most compelling.
Lazarus Decl., Exh. 2 at p. 3 (emphasis added).
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LEGAL STANDARD
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The City agrees with Walgreens' presentation of the legal standard for granting a preliminary
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injunction. One should not issue here because Walgreens has not shown a likelihood of success.
I.
DISCUSSION
THE ORDINANCE DOES NOT VIOLATE EQUAL PROTECTION.
A.
The Ordinance Enjoys A Strong Presumption Of Validity.
The rational basis test is highly deferential to the judgments of policymakers, including
judgments about whether similarly-situated groups may be treated differently. The test "manifests
restraint by the judiciary in relation to the discretionary act of a co-equal branch of government; in
so doing it invests legislation involving such differentiated treatment with a presumption of
constitutionality and 'requires merely that distinctions drawn by a challenged statute bear some
rational relationship to a conceivable legitimate state purpose.'" Hernandez v. City of Hanford, 41
Cal.4th 279, 298-99 (2007) (quoting Warden v. State Bar, 21 Cal.4th 628, 640-41 (1999)).
"[T]he burden of demonstrating the invalidity of a classification under this standard rests
squarely upon the party who assails it." Warden, 21 Cal.4th at 641. The legislation "must be
upheld against equal protection challenge if there is any reasonably conceivable state of facts that
could provide a rational basis for the classification. Where there are plausible reasons for the
classification, our inquiry is at an end." Warden, 21 Cal.4th at 644 (quoting FCC v. Beach
Communications, Inc., 508 U.S. 307, 313 (1993)) (emphasis in original).
It bears noting that to satisfy rational basis review, policymakers are not required to tackle
an entire problem at one time. "[U]nder the rational relationship test, the state may recognize that
different categories or classes of persons within a larger classification may pose varying degrees of
risk of harm, and properly may limit a regulation to those classes of persons as to whom the need
for regulation is thought to be more crucial or imperative." Warden, 21 Cal.4th at 644 (emphasis
added). "Evils in the same field may be of different dimensions and proportions, requiring different
remedies. Or so the legislature may think. Or the reform may take one step at a time, addressing
itself to the phase of the problem which seems most acute to the legislative mind." Williamson v.
Lee Optical of Oklahoma, Inc., 348 U.S. 483, 489 (1955) (internal citations omitted).
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B.
The Exclusion Of Grocery Stores And Big Box Stores From The Tobacco Sales
Ban Is Rational.
Walgreens contends that San Francisco's ban on tobacco sales by stores with pharmacies
violates equal protection because it irrationally excludes big box stores and grocery stores.
However, as set forth at pp. 4-6 above, the Board could rationally have concluded that the sale of
tobacco by health-promoting businesses sends an implicit message that smoking is acceptable. The
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Board further could have concluded that the sale of cigarettes by drug stores like Walgreens – the
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"pharmacy America trusts" – sends that implicit message of acceptability more strongly than the
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sale of cigarettes by big box stores or grocery stores, even if those stores too have pharmacies in
them. Finally, the Board could rationally have concluded that a ban on sales in drug stores like
Walgreens and Rite Aid was more important than a ban on sales in big box and grocery stores,
given that the former type of store draws a larger proportion of sick people – people who may once
have been addicted to cigarettes and whose illnesses would be worsened by a relapse. Not only
could the Board rationally have drawn these conclusions; it heard compelling testimony in support
of them by the City's leading expert on, and promoter of, public health.10
Walgreens disputes the notion that the sale of a product by a health-promoting business
could send an implicit message that the product is acceptable. Despite the fact that this argument is
endorsed by the American Pharmacists Association, the California Pharmacists Association, and the
California Medical Association, Walgreens derides it as "absurd" in light of "all of the public
campaigns and pronouncements" against cigarettes. Plaintiff's Application for Preliminary
Injunction ("Application") at 8. Walgreens' argument is a non-sequitur. Explicit messages of
unacceptability do not preclude the existence of implicit messages of acceptability. Competing
messages can exist in the world. Would Walgreens contend that if the Mayor's Office or the San
Francisco Department of Public Health sold cigarettes, this would not imply that smoking enjoys a
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Of course, under rational basis review, the legislative record could have been completely
bare, and the Board was not required to "actually articulate at any time the purpose or rationale
supporting its classification." Nordlinger v. Hahn, 505 U.S. 1, 15 (1992).
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level of acceptability, simply because of some anti-smoking campaign by the State of California or
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the American Lung Association?11
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Walgreens next argues that even if it is rational to conclude that the sale of tobacco by
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health-promoting businesses sends an implicit message that smoking is acceptable, San Francisco
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may not, consistent with equal protection, distinguish between drug stores that sell cigarettes and
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more general stores that sell cigarettes. Walgreens focuses on the fact that drug stores – like big
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box stores and grocery stores with pharmacies – sell products other than pharmaceuticals. And it
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spends a great deal of time emphasizing that cigarettes are located in a different part of its stores
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from pharmaceuticals – again like grocery stores and big box stores.
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These similarities do exist to an extent, even if Walgreens gives short shrift to the fact that
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prescription drug sales represent a much higher percentage of total sales at chain drug stores than at
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general stores. DRJN, Exh. A (Finding No. 21). But regardless of the similarities, as the testimony
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of Dr. Katz established, there are also differences between drug stores and more general stores –
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differences that the legislators could rationally find significant.
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Walgreens' argument that the City only has two choices – ban sales in all stores with
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pharmacies or none at all – also ignores the principle that "different categories or classes of persons
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within a larger classification may pose varying degrees of risk of harm . . ." Warden, 21 Cal.4th at
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644, and "a legislature need not run the risk of losing an entire remedial scheme simply because it
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failed, through inadvertence or otherwise, to cover every evil that might conceivably have been
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attacked." McDonald v. Board of Election Comm'rs of Chicago, 394 U.S. 802, 809 (1969). See
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also Subsection A, supra. As Dr. Katz conceded to the Board, the sale of tobacco by big box stores
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and grocery stores with pharmacies may too send some level of implicit message that smoking is
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acceptable, even though people do not think of these stores in the same way as drug stores. But it is
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In any event, nowhere does Walgreens contend that a ban on the sale of tobacco by stores
with pharmacies in itself violates equal protection. Nor could it make this contention, because such
a policy does not draw distinctions between classes of similarly-situated individuals. See, e.g.,
People v. Hofsheier, 37 Cal.4th 1185, 1200 (2006) (making clear that if the groups receiving
differential treatment are not similarly situated for purposes of the ordinance, no level of equal
protection scrutiny is applied – not even rational basis).
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rational to conclude that the harm caused by the sale of tobacco at drug stores like Walgreens is
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greater and more immediate, given the societal perception that such stores are health-promoting
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businesses. The City may ultimately determine that all stores with pharmacies should be barred
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from selling tobacco, but for now San Francisco's policymakers "properly may limit [the] regulation
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to those classes of [businesses] as to whom the need for regulation is thought to be more crucial or
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imperative." Warden, 21 Cal.4th at 644.
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C.
Walgreens' Apparent Assertion That The Ordinance Violates Equal Protection
Because It Is "Anticompetitive" Has No Support In Law.
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Walgreens appears to suggest that the ordinance violates equal protection because it has
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"anti-competitive" effects. See, e.g., Application at 1. Although the factual accuracy of this
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assertion is questionable,12 it is irrelevant. Just last year the California Supreme Court reiterated the
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obvious: laws often have anti-competitive effects, yet such effects do not give rise to a
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constitutional claim. Hernandez, 41 Cal.4th at 298. In Hernandez, the Court upheld a local zoning
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ordinance that was designed to protect the viability of a downtown commercial district by banning
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furniture sales in another commercial district, even while recognizing that the ordinance had a clear
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and direct impact on competition between businesses in the two districts. Id.
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Even more pertinent to this case, although the ordinance at issue in Hernandez banned the
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sale of furniture in this particular commercial district, it exempted big box stores from the ban. Id.
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The Court recognized that although it was rational for the city to impose a ban in this district to
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protect the dowtown district's economic viability, it was also rational to exclude big box stores from
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the ban, to enable the city to attract and retain big box stores within that area. Id. at 302. Even
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aside from the rationale set forth by Dr. Katz for the distinction between drug stores and more
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general stores, which has nothing to do with economics, Hernandez shows that the Board could also
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rationally have excluded big box stores and grocery stores for economic reasons. See, e.g., C.W.
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Nevius, Supermarkets become endangered species in S.F., San Francisco Chronicle (Sept. 18, 2008)
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As the Board found, an overwhelming percentage of California consumers surveyed
(96.8%) stated they would continue to patronize their drug store as often or more often if it stopped
selling tobacco products. DRJN Exh. A (Finding No. 12).
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at p. B1. Certainly Walgreens' speculation that the ordinance might have anticompetitive effects is
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no basis for striking it down.
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D.
The Case Law Cited By Walgreens Does Not Support Its Equal Protection
Claim.
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Walgreens lists a number of cases, including several from the 1930's, in which California
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courts struck down economic or social welfare legislation. But Walgreens provides no analysis of
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how these cases support its contention that the City's distinction between drug stores and more
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general stores is not rationally related to the purpose of undercutting the implicit message that
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smoking is acceptable. Nor does Walgreens explain how these cases show that the City may not
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first regulate the stores that present this problem most squarely.
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For example, in Justesen's Food Stores, Inc. v. City of Tulare, 12 Cal.2d 324, 330 (1938),
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the Court struck down an ordinance that distinguished between stores selling food to customers for
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consumption on the premises, and stores selling food for customers to bring home. The Court could
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conceive of no rational reason for distinguishing between the two for purposes of food safety, so it
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held the ordinance violated equal protection. Id. Here, as discussed above, there are several
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conceivable reasons for distinguishing between drug stores and more general stores.
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Walgreens also makes much of the quote from Justesens that "if the ordinance is
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discriminatory, irrespective of the purpose for which it is passed, it must be declared invalid. If it
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applies to all persons conducting a business which comes reasonably within the same classification,
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it will be upheld, but if it excepts any particular business which comes within the same reasonable
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classification, it must be held discriminatory." Id. at 329 (internal quotations omitted). This
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overbroad dicta from 1938 is clearly wrong, as evidenced most recently by the Supreme Court's
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ruling in Hernandez upholding discrimination between big box stores that sold furniture and other
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retail stores that sold furniture. 41 Cal.4th at 302. The actual rule is that if economic or social
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welfare legislation discriminates between persons or groups who are similarly situated, the
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discrimination is permissible so long as it "bears a rational relationship to a legitimate state
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purpose." Hofsheier, 37 Cal.4th at 1200.
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The other cases on Walgreens' list are equally unhelpful – the courts in those cases simply
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found no rational basis for the legislative classification at issue, whereas here there is indeed a
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rational basis for the classification. For example, in College Area Renters & Landlord Ass'n v. City
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of San Diego, 43 Cal.App.4th 677, 686 (1996), the court may have concluded there was no rational
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basis for distinguishing between owner-occupied and tenant-occupied homes for purposes of
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overcrowding laws, but that provides no support for the contention that the distinction here between
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drug stores and more general stores is irrational. And in Deese v. City of Lodi, 21 Cal.App.2d 631,
8
637 (1937), the court understandably held that there is no rational basis for concluding that a
9
tobacco store, with its "nicotine and smoke-laden atmosphere," is safer or more healthy than a
10
grocery store. But that conclusion does not speak to the case at hand (other than to confirm that
11
some members of the judiciary were aware that tobacco is unhealthy as far back as 1937).
12
E.
Even If The Classification Violated Equal Protection, Walgreens Would Not Be
Entitled To An Injunction Preventing Enforcement Of The Ordinance.
13
Walgreens has challenged the validity of the City's decision to exclude big box stores and
14
grocery stores from the ban. It does not contend – and could not contend – that a ban on tobacco
15
sales by all stores with pharmacies would violate equal protection. Stores with pharmacies are not
16
similarly situated to stores without pharmacies for purposes of this ordinance, which means a
17
classification between them does not trigger any level of equal protection scrutiny. Hofsheier, 37
18
Cal.4th at 1200. See also note 11, supra. Thus, the only question here is whether the exclusion
19
violates equal protection. As discussed above, it does not.
20
But even if it did, the ordinance's severability section would protect the remainder of the
21
legislation. That section states in pertinent part: "If any of the provisions of this Article . . . is held
22
invalid, the remainder of this Article . . . shall not be affected thereby and shall continue in full force
23
and effect. To this end, the provisions of this Article are severable." PRJN Exh. A at p. 8. As the
24
courts have made clear, "the general presumption of constitutionality, fortified by the express
25
statement of a severability clause, normally calls for sustaining any valid portion of a statute
26
unconstitutional in part." Santa Barbara School Dist. v. Superior Court, 13 Cal.3d 315, 330 (1975).
27
Indeed, an invalid portion of an ordinance must be severed if it is "grammatically, functionally, and
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volitionally separable" from the rest of the measure. Hotel Employees & Restaurant Employees Int'l
2
Union v. Davis, 21 Cal.4th 585, 613 (1999).
3
Clearly the exemption is grammatically severable. The central provision of the ordinance –
4
codified at Section 1009.92 of the San Francisco Health Code – states, "[n]o person shall sell
5
tobacco products in a pharmacy, except as provided in Sec. 1009.93." PRJN Exh. A at p. 7
6
(Ordinance No. 194-08). In turn, Section 1009.93 provides that big box stores and grocery stores
7
may sell tobacco even if they do have pharmacies. Id. Upon a ruling that the exclusion is
8
unconstitutional, the phrase "except as provided in Sec. 1009.93" would simply become inoperative,
9
as would Section 1009.93 itself. But the language of Section 1009.92 stating "[n]o person shall
10
11
tobacco products in a pharmacy . . ." would retain independent meaning and force.13
It is equally clear that the exemption is functionally severable from the ordinance. As a
12
practical matter, a ban on tobacco sales by stores with pharmacies may exist regardless of whether
13
big box stores and grocery stores are included within the ban.
14
Finally, there can be no question, in light of the legislative history, that the exclusion is
15
volitionally severable. An invalid provision is volitionally severable where it "was not of critical
16
importance to the measure's enactment." Hotel Employees, 21 Cal.4th at p. 613 (emphasis added).
17
As Walgreens notes in its papers, far from being of critical importance, the exemption caused some
18
members of the Board to express concerns about the ordinance. In response, Dr. Katz assured
19
Board members that he did not oppose extending the ban to big box stores and grocery stores with
20
pharmacies, and that this could very well be something the Board accomplishes in the future. See
21
pp. 5-6, supra. With that, the ordinance passed.
22
Accordingly, even if the Court concluded that the classification drawn by the ordinance is
23
likely to violate equal protection, it should deny Walgreens' motion to enjoin enforcement of the
24
ordinance in its entirety. The only appropriate remedy would be an order enjoining the City from
25
exempting big box stores and general grocery stores from the tobacco sales ban.
26
13
27
The ordinance defines "pharmacy" as a "retail establishment" in which "the profession of
pharmacy . . . is practiced and where prescriptions are offered for sale." PRJN Exh. A at p. 6.
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2
II.
THE ORDINANCE WAS NOT ADOPTED IN VIOLATION OF PROPOSITION I.
Walgreens also contends the ordinance was "enacted in violation of" San Francisco
3
Administrative Code section 10.32. That local ordinance, which was added by Proposition I in
4
2004, directs the Office of Economic Analysis ("OEA") in the San Francisco Controller's Office to
5
determine which legislation introduced before the Board "might have a material economic impact
6
on the City," and to provide the Board with a report on any such legislation. S.F. Admin. Code
7
§10.32 (PRJN Exh. G). Walgreens contends the OEA abused its discretion by concluding that the
8
ordinance was unlikely to have such an impact, thereby rendering the ordinance invalid.
9
Application at 12-13. As set forth below, the OEA did not abuse its discretion, and even if it did,
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
this would not invalidate the ordinance.
A.
The OEA Reasonably Determined That The Ordinance Would Have No
Material Economic Impact On The City.
"Where a statute leaves room for discretion, a challenger must show the official acted
arbitrarily, beyond the bounds of reason or in derogation of the applicable legal standards."
Excelsior College v. Bd. of Registered Nursing, 136 Cal.App.4th 1218, 1239 (2006). Walgreens
asserts that the OEA acted arbitrarily by limiting its consideration to the ordinance's potential
impact on the pricing of cigarettes, while "entirely ignor[ing] overall lost tax and fee revenues to the
City, business attraction and retention, and job creation . . ." Application at 13.
But in fact, the OEA firmly concluded that the ordinance would have no material impact on
the City's economy – not only in terms of pricing, but in terms of jobs and tax revenues as well.
First, the OEA determined that because drug stores have such a small share of the overall cigarette
market in San Francisco, the inability of those stores to continue selling cigarettes would not have a
material impact on cigarette pricing. Declaration of Ted Egan in Opposition to Application for a
Preliminary Injunction ("Egan Decl.") at ¶ 4. Similarly, given the small market share of businesses
covered by the ordinance, the OEA concluded that the ordinance would not materially affect the
amount of cigarette sales; it would only affect where people would purchase cigarettes. Id. Once
the OEA made these determinations, it was easy to conclude that the ordinance would have no net
effect on jobs. Jobs lost by businesses covered by the ordinance, if any at all, would be gained by
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businesses who continued selling cigarettes. Id. It was equally easy for the OEA to conclude that
2
the City would experience no significant net gain or loss of sales tax revenue; if anything, the City
3
would simply end up collecting fewer revenues from some sources and more revenues from others.
4
Id. at 5. Walgreens notes that the documents provided by the OEA in response to its Public Records
5
Act request deal only with pricing, but for someone with the qualifications of Ted Egan, see id. at ¶
6
2, no documentation was required to come to the obvious conclusions reached by the OEA about
7
job creation and revenues, once it had been determined that the ordinance would have no material
8
effect on pricing or sales. Id. at ¶ 6. There was no abuse of discretion in the OEA's determination
9
that the ordinance was unlikely to have a material economic impact.14
10
B.
11
In Any Event, The Failure Of The OEA To Prepare A Report Can Never Be
Grounds For Invalidating An Ordinance Enacted By The Board Of
Supervisors.
12
Even if the OEA had abused its discretion, that would not strip the Board of its power to adopt
13
the ordinance. The requirement that the OEA prepare economic impact reports for selected legislation
14
is directed at the OEA, not the Board. It does not bar the Board from considering legislation absent an
15
economic impact report. Indeed, Proposition I's plain text shows that the voters recognized that it was
16
up to the Board to set its own legislative calendar. Section 2 of Proposition I, as it appeared in the voter
17
handbook, states that the voters "urge the Board . . . to adopt all necessary rules and procedures for [the
18
measure's] full implementation . . . [including] a Rule of Order providing that the Board shall not
19
consider or hold hearings on any proposed legislation until it has received the [OEA]'s report on the
20
impact of the legislation, if any." PRJN Exh. H (Legal Text of Proposition I) (emphasis added). If
21
Proposition I's drafters and the voters had intended to force the Board to refrain from adopting
22
legislation until the OEA submitted a report, they would not have merely "urged" the Board to
23
24
25
26
27
14
Walgreens uses the OEA's determination that the ordinance was unlikely to have a
material effect on tobacco sales to support of its argument that the ban is irrational. But as
discussed at length in Section I, that misses the point. The ordinance was never intended to have a
measurable, immediate impact on tobacco sales. It was intended to undercut the implicit message
that smoking is acceptable – a long-term, multi-front battle that the government has waged, and
undoubtedly will continue to wage, in an effort to prevent children and adolescents from becoming
addicted to cigarettes in the future.
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voluntarily restrain its legislative activities. The voters simply did not give the OEA – which is headed
2
by an unelected City official – the ability to stop elected representatives from enacting legislation.
3
Furthermore, even if the voters had intended to force the Board to await an OEA report before
4
adopting legislation, they could not have done so through Proposition I, an initiative ordinance. Where
5
a city charter grants a power to the municipality, "any limitations upon its exercise are those only which
6
have been specified in the charter." Cawdrey v. City of Redondo Beach, 15 Cal.App.4th 1212, 1222
7
(1993). If the voters wish to impose additional limitations on the Board’s exercise of its Charter-
8
derived legislative authority, they can only do so by amending the Charter. See City and County of San
9
Francisco v. Patterson, 202 Cal.App.3d 95, 102-106 (1988).
10
In Patterson, the court held that where the Charter "specif[ied] the procedures and standards for
11
the sale or exchange and lease of real property by the board," a proposed initiative ordinance
12
prohibiting the City from selling any real property for less than 90% of its fair market value absent
13
voter approval was "patently invalid" and had to be removed from the ballot. Id. at pp. 98, 103.
14
15
16
17
18
19
20
21
22
23
[A]n ordinance can no more change or limit the effect of a charter than a statute can modify or
supersede a provision of the state Constitution. Under the provisions of the San Francisco City
Charter, all powers neither delegated to other officials, boards or commissions nor reserved to
the people are vested in the board of supervisors. §§ 1.101, 2.101. Thus, any restrictions on the
power of the board must be explicitly provided by the charter or accomplished by charter
amendment. [Id. at pp. 102-103 (internal citation omitted and italics added).]
The same rule applies here. The Charter specifies the procedures the Board must follow to exercise
its legislative power.15 If Proposition I purported to add a new procedure, it would be "an indirect attempt
to accomplish what can only be done directly by amendment of the [C]harter." Id. at 105.
City and County of San Francisco v. Cooper, 13 Cal.3d 898 (1975), Robertson v. Health Net
of Cal., Inc., 132 Cal.App.4th 1419 (2005), and Walker v. County of Los Angeles, 55 Cal.2d 626
(1961), are entirely unhelpful to Walgreens. None suggests that an ordinance can restrict the
legislative power that a local legislative body enjoys under its charter. In fact, Walker, by holding
24
25
15
26
27
See, e.g., San Francisco Charter, §2.105 (ordinances "shall be referred to and reported
upon by an appropriate committee of the Board," "shall require the affirmative vote of a majority of
the members of the Board," and "shall require two readings at separate meetings of the Board
…which shall be held at least five days apart").
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that a city charter can restrict local legislative power, simply underscores our point: a local
2
ordinance, such as Administrative Code section 10.32, cannot do so.
3
In sum, if Walgreens believed the OEA abused its discretion by not preparing an economic
4
analysis of the ordinance, it should have sought a writ to compel the OEA to comply with its
5
ministerial duty to do so once it became aware that the Board was considering the legislation. 16 To
6
be sure, Walgreens would have lost that writ action, because the OEA soundly exercised its
7
discretion not to prepare a report. But that is the remedy available for the alleged abuse of
8
discretion; not an after-the-fact invalidation of the legislation duly enacted by the Board in
9
accordance with the Charter.
CONCLUSION
10
11
Because Walgreens has shown no likelihood of success on the merits, the Court should deny
12
the application for a preliminary injunction.
13
Dated: February 13, 2016
DENNIS J. HERRERA
City Attorney
14
15
By:
16
VINCE CHHABRIA
17
Attorneys for Defendants
CITY AND COUNTY OF SAN FRANCISCO, ET AL.
18
19
20
21
22
23
24
25
26
16
27
Walgreens was aware early on that the Board was considering the legislation, as
evidenced by its Public Records Act request.
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