Johnson & Johnson appeal to 10th Circuit

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An appeal by Johnson & Johnson to the 10th Circuit Court of Appeals, challenging Utah's anti-price fixing statute on contact lenses.

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Appellate Case: 15-4073

Document: 01019451233

Date Filed: 06/26/2015

Page: 1

No. 15-4071
IN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
________________
JOHNSON & JOHNSON VISION CARE, INC.,
Plaintiff-Appellant,
v.
SEAN D. REYES, in his official capacity as Attorney General of Utah
Defendant-Appellee
and
1-800 CONTACTS, INC.; COSTCO WHOLESALE CORPORATION
Intervenors-Appellees
________________
On Appeal from the United States District Court
for the District of Utah (Benson, J., No. 2:15-cv-00252)
Oral Argument Scheduled for August 27, 2015
________________
OPENING BRIEF OF PLAINTIFF-APPELLANT
JOHNSON & JOHNSON VISION CARE, INC.
________________
Jerome A. Swindell
Assistant General Counsel
JOHNSON & JOHNSON
One Johnson & Johnson
Plaza
New Brunswick, NJ 08933
(732) 524-3965

Kenneth B. Black
Timothy K. Conde
STOEL RIVES LLP
201 South Main Street,
Suite 1100
Salt Lake City, Utah 84111
(801) 328-3131

Jonathan F. Cohn
Ken Glazer
Kwaku A. Akowuah
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, DC 20005
(202) 736-8110

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CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rule of Appellate Procedure 26.1, Plaintiff-Appellant
Johnson & Johnson Vision Care, Inc., makes the following disclosure:
Johnson & Johnson Vision Care, Inc., is a wholly-owned subsidiary of
Johnson & Johnson.
Respectfully submitted,

/s/ Jonathan F. Cohn
Jonathan F. Cohn
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
Telephone: (202) 736-8110
Facsimile: (202) 736-8711

Dated: June 26, 2015

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TABLE OF CONTENTS
TABLE OF AUTHORITIES ................................................................................... iii
STATEMENT OF RELATED CASES ................................................................. viii
JURISDICTIONAL STATEMENT .......................................................................... 1
ISSUE PRESENTED FOR REVIEW ....................................................................... 1
CONSTITUTIONAL AND STATUTORY PROVISIONS...................................... 2
STATEMENT OF THE CASE .................................................................................. 3
A.

Factual Background............................................................................... 3

B.

The District Court Litigation ................................................................. 7

C.

Prior Proceedings On This Appeal ...................................................... 10

SUMMARY OF ARGUMENT ............................................................................... 11
STANDARD OF REVIEW ..................................................................................... 15
ARGUMENT ........................................................................................................... 16
I.

The District Court Misapplied Established Standards for Weighing PreEnforcement Constitutional Challenges to Statutes ...................................... 16

II.

The District Court Misapplied Established Commerce Clause
Standards........................................................................................................ 19
A.

The District Court Erred in Failing To Apply the “Direct
Regulation” Prong of the Commerce Clause Analysis ....................... 21

B.

The District Court Erred in Treating Section 905.1’s Patently
Extraterritorial Effects as Likely Permissible ..................................... 24

C.

The District Court Erred In Seeking to Justify Section 905.1’s
Facial Discrimination Against Interstate Commerce .......................... 28
1.

Section 905.1 discriminates against both out-of-state
manufacturers and out-of-state retailers ................................... 28
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2.

D.
III.

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The district court erred in finding that Section 905.1
could not be discriminatory because it is an antitrust
statute ........................................................................................ 31

The District Court Overlooked the Plainly Excessive Burden
That Section 905.1 Imposes on Interstate Commerce......................... 36

The District Court Misapplied The Remaining Elements of the
Injunction Standard ........................................................................................ 39
A.

JJVCI Demonstrated That It Would Suffer Irreparable Harm As
A Matter of Law .................................................................................. 39

B.

JJVCI Demonstrated That the Balance of Equities And Public
Interest Weigh Strongly In Favor of a Preliminary Injunction ........... 41

CONCLUSION ........................................................................................................ 43

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TABLE OF AUTHORITIES
Page(s)
Cases
ACLU v. Johnson,
194 F.3d 1149 (10th Cir. 1999) ....................................................................26, 39
Am. Trucking Ass’ns v. Scheiner,
483 U.S. 266 (1987) ......................................................................................41, 42
Awad v. Ziriax,
670 F.3d 1111 (10th Cir. 2012) .......................................................................... 41
Baldwin v. GAF Seelig, Inc.,
294 U.S. 511 (1935) ................................................................................25, 27, 33
Beach Commc’ns, Inc. v. F.C.C.,
959 F.2d 975 (D.C. Cir. 1992) ............................................................................ 16
Bhd. of Maint. of Way Employes Div./IBT v. Union Pac. R.R. Co.,
460 F.3d 1277 (10th Cir. 2006) .......................................................................... 15
Bos. Stock Exch. v. State Tax Comm’n,
429 U.S. 318 (1977) ......................................................................................12, 23
Brown-Forman Distillers Corp. v. New York State Liquor Auth.,
476 U.S. 573 (1986) .....................................................................................passim
Buckley v. Valeo,
424 U.S. 1 (1976) ................................................................................................ 16
C&A Carbone, Inc. v. Town of Clarkstown,
511 U.S. 383 (1994) ..........................................................................12, 22, 23, 33
California v. ARC America,
490 U.S. 93 (1989) .............................................................................................. 32
Chamber of Commerce of U.S. v. Edmondson,
594 F.3d 742 (10th Cir. 2010) ......................................................................40, 41
Chavez v. Whirlpool Corp.,
93 Cal. App. 4th 363 (Cal. Ct. App. 2001) ......................................................... 34
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City of Philadelphia v. New Jersey,
437 U.S. 617 (1978) ......................................................................................12, 23
Comptroller of the Treasury of Md. v. Wynne,
135 S. Ct. 1787 (2015) ............................................................................19, 26, 33
Copperweld Corp. v. Independence Tube Corp.,
467 U.S. 752 (1984) ......................................................................................14, 39
Edgar v. MITE Corp.,
457 U.S. 624 (1982) ......................................................................................12, 22
Exxon Corp. v. Governor of Maryland,
437 U.S. 117 (1978) ......................................................................................31, 32
Foster-Fountain Packing Co. v. Haydel,
278 U.S. 1 (1928) ..........................................................................................12, 23
Geneva Pharms. Tech. Corp. v. Barr Labs, Inc.,
386 F.3d 485 (2d Cir. 2004) ............................................................................... 38
Globe Glass & Mirror Co. v. Brown,
917 F. Supp. 447 (E.D. La. 1996) ....................................................................... 33
Granholm v. Heald,
544 U.S. 460 (2005) ............................................................................................ 29
Greater Yellowstone Coal. v. Flowers,
321 F.3d 1250 (10th Cir. 2003) .......................................................................... 15
Healy v. Beer Inst., Inc.,
491 U.S. 324 (1989) .....................................................................................passim
Hobby Lobby Stores, Inc. v. Sebelius,
723 F.3d 1114 (10th Cir. 2013) .......................................................................... 15
Holder v. Humanitarian Law Project,
561 U.S. 1 (2010) ..........................................................................................18, 19
Hughes v. Oklahoma,
441 U.S. 322 (1979) ................................................................................23, 29, 36

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Hunt v. Wash. State Apple Adver. Comm’n,
432 U.S. 333 (1977) ............................................................................................ 33
Johns v. Stewart,
57 F.3d 1544 (10th Cir. 1995) ............................................................................ 40
Kan. Health Care Ass’n v. Kan. Dep’t of Soc. & Rehab. Servs.,
31 F.3d 1536 (10th Cir. 1994) ............................................................................ 40
Kansas Judicial Review v. Stout,
519 F.3d 1107 (10th Cir. 2008) ....................................................................17, 35
Kleinsmith v. Shurtleff,
571 F.3d 1033 (10th Cir. 2009) .......................................................................... 20
KT&G Corp. v. Att’y Gen. of Okla.,
535 F.3d 1114 (10th Cir. 2008) ..............................................................20, 29, 36
Leegin Creative Leather Prods., Inc. v. PSKS, Inc.,
551 U.S. 877 (2007) ............................................................................................ 38
MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118 (2007) ................................................................................12, 18, 19
New Energy Co. of Ind. v. Limbach,
486 U.S. 269 (1988) ......................................................................................31, 33
New England Power Co. v. New Hampshire,
455 U.S. 331 (1982) ............................................................................................ 22
Nken v. Holder,
556 U.S. 418 (2009) ............................................................................................ 41
Oneok, Inc. v. Lear-Jet, Inc.,
135 S. Ct. 1591 (2015) ............................................................................14, 34, 39
Or. Waste Sys., Inc., v. Dep’t of Envtl. Quality,
511 U.S. 93 (1994) ........................................................................................23, 36
People v. Tempur-Pedic Int’l, Inc.,
95 A.D.3d 539 (N.Y. App. Div. 2012) ............................................................... 34

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Pharm. Research & Mfrs. of Am. v. Dist. of Columbia,
406 F. Supp. 2d 56 (D.D.C. 2005), aff’d sub nom. Biotech. Indus.
Org. v. Dist. of Columbia, 496 F.3d 1362 (Fed. Cir. 2007) ............................... 33
Pike v. Bruce Church, Inc.,
397 U.S. 137 (1970) ......................................................................................36, 37
PSKS, Inc. v. Leegin Creative Leather Products, Inc.,
615 F.3d 412 (5th Cir. 2010) .............................................................................. 34
Quik Payday, Inc. v. Stork,
549 F.3d 1302 (10th Cir. 2008) ....................................................................16, 37
Shafer v. Farmers Grain Co.,
268 U.S. 189 (1925) ............................................................................................ 22
Smith Mach. Co., Inc. v. Hesston Corp.,
878 F.2d 1290 (10th Cir. 1989) .......................................................................... 38
Southern Pac. Co. v. Arizona ex rel. Sullivan,
325 U.S. 761 (1945) ............................................................................................ 30
Terrace v. Thompson,
263 U.S. 197 (1923) ............................................................................................ 18
United Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt. Auth.,
550 U.S. 330 (2007) ......................................................................................28, 30
United States v. Colgate & Co.,
250 U.S. 300 (1919) ............................................................................................ 34
V-1 Oil Co. v. Utah State Dep’t of Pub. Safety,
131 F.3d 1415 (10th Cir. 1997) .......................................................................... 37
Vill. of Hoffman Estates v. Flipside, Hoffman Estates, Inc.,
455 U.S. 489 (1982) ............................................................................................ 16
W. Lynn Creamery, Inc. v. Healy,
512 U.S. 186 (1994) ..........................................................................20, 29, 31, 33
Westman Comm’n Co. v. Hobart Int’l., Inc.,
796 F.2d 1216 (10th Cir. 1986) .......................................................................... 38
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Ex parte Young,
209 U.S. 123 (1908) ............................................................................................ 17
Statutes
Or. Rev. Stat. Ann. § 650.205 .................................................................................. 34
R.I. Gen Laws § 5-55-4............................................................................................ 34
Utah Code Ann. § 13-14-201 ................................................................................... 34
Utah Code § 58-16a-904 .......................................................................................... 35
Utah Code § 58-16a-905.1 ................................................................................passim
Utah Code § 58-16a-906 ......................................................................................2, 21
Other Authorities
16 C.F.R. § 315.5 ....................................................................................................... 3
James Rowley, “Ping, Golf Club Maker, to Benefit From Court
Ruling (Update1),” Bloomberg (Jul. 12, 2007), available at
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aw
SNQOivaoWs&refer=us ....................................................................................... 5
Martin Moylan, “Apple among brands in pricing tension with
retailers,” MPRNews (Dec. 4, 2012), available at
http://www.mprnews.org/story/2012/12/04/business/competitiveretail-pricing-policy; ............................................................................................. 5

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STATEMENT OF RELATED CASES
The district court order under appeal is also the subject of the pending
appeals captioned Alcon Laboratories, Inc. v. Reyes, No. 15-4072, and Bausch &
Lomb Incorporated v. Reyes, No. 15-4073, which were initiated on the same day as
this appeal (May 12, 2015).

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JURISDICTIONAL STATEMENT
The district court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343.
The district court denied Appellant’s motion for a preliminary injunction on May
11, 2015. Appellant timely filed a notice of appeal on May 12, 2015. This Court’s
jurisdiction over this interlocutory appeal rests on 28 U.S.C. § 1292(a)(1).
ISSUE PRESENTED FOR REVIEW
Manufacturers set the retail prices for numerous consumer goods in
interstate commerce, including iPhones, televisions, golf clubs, luxury fashion
products, and contact lenses. Under the law of 49 states, manufacturers are free to
terminate sales to retailers who refuse to sell at these prices. Interstate commerce
with recalcitrant retailers is not required.
The State of Utah, however, recently enacted a statute that compels specific
out-of-State manufacturers to sell products to in-State retailers who violate the
manufacturers’ pricing policies. The statute, Section 58-16a-905.1 of the Utah
Code (“Section 905.1”), is aimed exclusively at the contact lens industry and solely
at out-of-State manufacturers. It is undisputed that all contact lenses are
manufactured outside the State of Utah, and all of the burdens of Section 905.1 fall
on out-of-State interests. It is also undisputed that the statute benefits the business
model of a prominent in-State company, 1-800 CONTACTS.

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The question presented is whether Section 905.1 violates the dormant
Commerce Clause of the United States Constitution, and thus whether the district
court erred in denying Appellant’s preliminary injunction motion.
CONSTITUTIONAL AND STATUTORY PROVISIONS
The Commerce Clause of the United States Constitution provides:
“The Congress shall have Power . . . To regulate Commerce with foreign
Nations, and among the several States, and with the Indian Tribes.”
Utah Code Section 58-16a-905.1 provides:
“Contact lens manufacturer or distributor -- Prohibited conduct.
A contact lens manufacturer or a contact lens distributor may not:
(1) take any action, by agreement, unilaterally, or otherwise, that has the
effect of fixing or otherwise controlling the price that a contact lens retailer
charges or advertises for contact lenses; or
(2) discriminate against a contact lens retailer based on whether the contact
lens retailer:
(a) sells or advertises contact lenses for a particular price;
(b) operates in a particular channel of trade;
(c) is a person authorized by law to prescribe contact lenses; or
(d) is associated with a person authorized by law to prescribe contact
lenses.”
Utah Code Section 58-16a-906 in relevant part provides:
“Penalties for violations. * * * (2) The attorney general may bring a civil
action or seek an injunction and a civil penalty against any person who
violates a provision of Section . . . 58-16a-905.1.”
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STATEMENT OF THE CASE
A.

Factual Background

Contact lenses are medical devices regulated by the federal Food and Drug
Administration. A-29. As such, they may be purchased only pursuant to a
prescription written by a licensed eye care professional. 16 C.F.R. § 315.5; A-29;
A-279; A-725. One hundred percent of contact lenses in the United States are
produced outside of Utah, and nearly all are produced by four out-of-State
manufacturers, A-82, three of whom are plaintiffs and appellants in this case:
Johnson & Johnson Vision Care, Inc. (“JJVCI”), Alcon Laboratories, Inc., and
Bausch & Lomb, Incorporated.
JJVCI is the largest manufacturer of contact lenses by market share in the
United States. A-296. JJVCI manufacturers its ACUVUE® lenses in Jacksonville,
Florida (where it is headquartered and incorporated) and Limerick, Ireland. Id. It
does not manufacture any contact lenses in Utah.
Ninety percent of JJVCI’s contact lens sales are made to distributors and
retailers outside of Utah. Id. Among the 10% that are sold to Utah businesses,
approximately 99% are made to 1-800 CONTACTS, id., which in turn sells 99%
of its lenses to customers outside of Utah. All in all, Utah consumers purchase
fewer than 1% of ACUVUE® lenses. Id.

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Before the summer of 2014, consumers who purchased ACUVUE® lenses
frequently encountered a burdensome two-step pricing system. First, the consumer
would pay an initial retail price upon purchasing the lenses. A-297. Second,
consumers who met certain qualifications could then redeem manufacturer’s
rebates to receive a discount from the purchase price. Id.
That approach to pricing did not work well for ACUVUE® consumers.
Only one-in-five consumers purchased enough contact lenses to be eligible for the
rebates. Id. Even among those eligible, only three-in-ten would actually complete
and mail the rebate form. Id. And even the small fraction of consumers who were
eligible for rebates and completed and mailed the necessary paperwork had to wait
roughly two months to receive their rebate payments. Id.
In the summer of 2014, JJVCI introduced its nationwide Unilateral Pricing
Policy (“UPP”). Id. The UPP eliminated manufacturer’s rebates and replaced
them with a nationwide minimum price—which was set below the pre-UPP
national average. A-298; A-301. Under the UPP, JJVCI will stop selling
ACUVUE® lenses to retailers who fail to charge the minimum price. A-298; A301. The UPP thereby makes life simpler for both the eye care professional and
the consumer. The eye care professional can devote more time to treating patients
and less time to monitoring prices and rebates offered by retailers, and the
consumer knows there is no need to shop around for a better bargain as long as the
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eye care professional is charging the minimum price. A-298. And because the
minimum price is lower than the pre-UPP national average sales price, the vast
majority of consumers pay lower net costs as a result of the UPP. Id.
Additionally, because JJVCI simultaneously reduced the wholesale price of
ACUVUE® lenses, id., retailers incur lower costs, too.
JJVCI’s UPP is far from unique. Manufacturers, rather than retailers, set
prices for iPhones, televisions, luxury fashion goods, golf clubs, and many other
diverse products.1 These pricing policies are just one piece of a broader reality that
the interests of manufacturers and retailers are not always aligned when it comes to
consumer purchases. Manufacturers and retailers have independent brand
identities, consumer bases, strategic goals, and financial pressures that may give
rise to differing views on how a product should be priced, advertised, or otherwise
presented for sale to consumers. The working out of those differential positions is
an intrinsic part of the free market, and sometimes leads a manufacturer to do
business only with retailers who will respect the manufacturer’s pricing goals.

1

See, e.g., Martin Moylan, “Apple among brands in pricing tension with retailers,”
MPRNews (Dec. 4, 2012), available at
http://www.mprnews.org/story/2012/12/04/business/competitive-retail-pricingpolicy; James Rowley, “Ping, Golf Club Maker to Benefit From Court Ruling
(Update1),” Bloomberg (Jul. 12, 2007), available at
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=awSNQOivaoWs&r
efer=us.
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Some contact lens retailers, most notably 1-800 CONTACTS, oppose the
UPP and commenced a concerted lobbying effort at the federal level. Testifying
before a Senate subcommittee in July 2014, the general counsel for 1-800
CONTACTS recognized the national character of the contact lens market and
requested federal intervention. See A-488. Congress, however, chose not to
respond with legislation. No bill was ever introduced.
Undaunted, the retailers turned their attention to the states and lobbied them
to legislate the national contact lens industry. Most states rejected these efforts,
but one did not. Answering the call of its in-state favored son, the Utah legislature
passed Section 905.1 on March 10, 2015, and the Governor of Utah signed it into
law on March 27, 2015. The statute became effective on May 12, 2015.
1-800 CONTACTS describes itself modestly as “one of the initial supporters
of the legislation that became [Section 905.1].” A-470. In fact, Utah lawmakers—
both supporters and opponents of Section 905.1—recognized that the proposed law
was “targeted” to help “1-800 CONTACTS, a Utah-based business,” in a “turf
battle” with out-of-state contact lens manufacturers. See A-228 (Meeting of the
Utah Senate Business and Labor Standing Committee (Feb. 17, 2015)); A-83
(opponent of Section 905.1 praising 1-800 CONTACTS as “a company I think we
all revere . . . and are pleased to have in our State” and describing the proposed
legislation as being aimed at “things going on in the . . . market that are obviously
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disruptive to their business model”) (House Floor debate) (Mar. 10, 2015). The
law was “dubbed . . . the 1-800 bill.” A-93 (House Floor debate) (Mar. 10, 2015).
As enacted, the statute provides that a “contact lens manufacturer or a
contact lens distributor may not . . . take any action, by agreement, unilaterally, or
otherwise, that has the effect of fixing or otherwise controlling the price that a
contact lens retailer charges or advertises for contact lenses.” A-314. It also
provides that a contact lens manufacturer or distributor may not “discriminate
against a contact lens retailer” who “sells or advertises contact lenses for a
particular price.” Id. The state Attorney General may enforce these provisions by
bringing a civil action or seeking an injunction and civil penalty. Id.
B.

The District Court Litigation

On April 13 and 14, 2015, JJVCI, Alcon, and Bausch & Lomb each filed a
complaint in the District of Utah seeking declaratory and injunctive relief. A-24;
A-249; A-259. The complaints alleged that Section 905.1 violated the Commerce
Clause. Together with their complaints, each manufacturer filed a motion for a
preliminary injunction. A-43; A-273; A-315. 1-800 CONTACTS and Costco
intervened in support of Section 905.1, and the actions were consolidated. A-9
(docket entry 26).
The district court held oral argument on May 5, 2015. A-785. At the
hearing, counsel from the Office of the Utah Attorney General struggled to
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articulate how the State of Utah construes the statute and substantially ceded the
floor to 1-800 CONTACTS. See A-841 – A-848. The State’s counsel responded
to the court’s requests for an explanation by refusing to “speculate” on
“hypotheticals.” A-845 – A-846. In particular, counsel was unable to say whether
Section 905.1 applies when 1-800 CONTACTS sells to consumers outside of
Utah.2
Nonetheless, the district court denied the manufacturers’ motions for a
preliminary injunction. A-775. Contrary to prevailing law, the court viewed the
State’s “uncertainty as to how and what extent the law will be enforced” as a
reason not to enjoin it. A-771. The court also failed to consider JJVCI’s primary

2

THE COURT: Well, it is a simple question. When 1-800 starts to sell
product they could claim, just singling them out because they seem to fit the
definition of a Utah retailer, and just looking at 1-800 Contacts, after this
law goes into effect can tell these four manufacturers we want all the product
you will sell us. Then they claim under this law that they would be free to
sell it as a retailer at any price that they think they want to sell it at, correct?
MR. DOUGLAS: Correct.
THE COURT: Now, if they sell out of state and these manufacturers attempt
to impose their retail price program on them, because they are doing
something that they claim affects interstate commerce, and they have the
right in that connection to do what Section 1 seems to forbid, will the Utah
Attorney General’s Office seek to punish them and to cite them and to get
civil penalties from them for violating this Act?
MR. DOUGLAS: I will answer that with a perhaps . . . .

A-846 – A-848 (emphasis added).
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contention that Section 905.1 directly regulates interstate commerce, and rejected
the arguments it did consider.
First, the district court found no “clear indication” that Section 905.1 would
have an extraterritorial effect—despite the fact that all contact lens manufacturers
and roughly 99% of contact lens consumers are located outside of Utah. A-766 –
A-767.
Second, the district court found no impermissible discrimination against outof-state interests, A-767, even though Section 905.1 favors in-state retailers over
out-of-state manufacturers as well as out-of-state retailers. The court reasoned that
Section 905.1 “is nothing more than a state antitrust statute, tailored to a specific
industry, which the state has the power to enact.” A-769. The court acknowledged
the manufacturers’ argument that Section 905.1 differs from a traditional antitrust
statute in that its “discrimination” provision requires out-of-state manufacturers to
ship contact lenses to “Utah retailers.” A-770. But the court found this argument
“premature and speculative,” in part because “[a]t oral argument, the Attorney
General’s representative expressed some uncertainty as to how and to what extent
the law will be enforced.” A-770 – A-771. The court declared that it would
“presume[] the Utah Attorney General will enforce the statute in a manner that
does not violate the Commerce Clause.” A-771.

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Third, the district court found no excessive burden on interstate commerce.
Id. The court held that, given the Attorney General’s equivocation about the scope
of the law, the apparent burdens were “no greater than the burden imposed by any
other state antitrust law.” A-772.
Finally, relying on its constitutional analysis, the district court held that the
other preliminary injunction factors weighed against issuance of a preliminary
injunction. See A-772 – A-774.
C.

Prior Proceedings On This Appeal

JJVCI filed its notice of appeal on May 12, 2015, A-776, and moved the
same day for an injunction pending appeal. ECF No. 01019429905. The next day,
this Court temporarily enjoined enforcement of Section 905.1. ECF No.
01019430725. On June 12, 2015, this Court dissolved the temporary injunction,
denied the motion for an injunction pending appeal, and set an expedited briefing
schedule. ECF No. 01019444443.3 A special inter-term session of the Court has
been organized to hear argument on August 27, 2015.

3

Undersigned counsel hereby certify, pursuant to Rule 31.3(A)-(B) of the Tenth
Circuit Rules, that this separate brief is appropriate in light of the Court’s statement
in the June 12, 2015 Order that “[e]ach party may file its own brief,” in light of the
need for JJVCI to separately set out its distinct rationale for adopting a UPP, and in
light of the expedited briefing schedule ordered by the Court.
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SUMMARY OF ARGUMENT
Section 905.1 is unprecedented. It denies one specific group of disfavored
out-of-State companies a power commonly exercised by manufacturers
generally—the right to set the prices of their own products. The district court
committed several errors of law in refusing to enjoin this law.
As an initial matter, the district court drew the wrong inference from the
State’s refusal to take a position on the scope of Section 905.1. A court ordinarily
will defer to a narrowing construction offered by an enforcing agency. When no
such agency construction is forthcoming, it is incumbent on the court to adopt its
own construction of the law (whether or not identical to the plaintiff’s position)
and analyze the constitutional challenge in those terms. Here, the district court
instead held that any uncertainties about the scope of the law will have to wait until
Utah brings an enforcement action, and “presume[d]” that whatever position Utah
takes in that enforcement action will conform to the Commerce Clause.
That is not how a pre-enforcement challenge brought under the Declaratory
Judgment Act is supposed to work. Plaintiffs demonstrated that they are at risk of
enforcement because Section 905.1 was specifically enacted to prohibit their UPPs
and require them to keep selling to Utah retailers. The State does not deny that
they are at risk. Plaintiffs are therefore entitled to a federal court adjudication of
their constitutional claim, prior to enforcement. The manufacturers need not “bet
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the farm” on the outcome of a state enforcement action in order to challenge an
unconstitutional law. See, e.g., MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
128-29 (2007) (citing cases).
The district court also committed four clear substantive errors in finding that
JJVCI was unlikely to succeed in its dormant Commerce Clause claim.
First, the district court failed even to address whether Section 905.1 is an
impermissible “direct regulation” of interstate commerce. As the Supreme Court
has held, a state may regulate interstate commerce only by way of laws “directed to
legitimate local concerns, with effects upon interstate commerce that are only
incidental.” City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)
(emphasis added); see also Edgar v. MITE Corp., 457 U.S. 624, 640 (1982)
(plurality) (“direct regulation is prohibited”). Utah cannot dictate special terms
that apply exclusively to a designated set of interstate transactions between out-ofstate manufacturers and in-state retailers. Nor may the State command that
commercial goods be sold within its borders. See, e.g., Bos. Stock Exch. v. State
Tax Comm’n, 429 U.S. 318, 336-37 (1977); C&A Carbone, Inc. v. Town of
Clarkstown, 511 U.S. 383, 392 (1994); Foster-Fountain Packing Co. v. Haydel,
278 U.S. 1 (1928).
Second, the district court erroneously held that Section 905.1 is not
unconstitutional based on its extraterritorial effects. A state law may not have the
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“practical effect” of controlling commercial transactions that occur beyond its
borders. Healy v. Beer Inst., Inc., 491 U.S. 324, 336 (1989); see also BrownForman Distillers Corp. v. New York State Liquor Auth., 476 U.S. 573, 580 (1986)
(“The mere fact that the effects of New York’s [alcohol law] are triggered only by
sales of liquor within the State of New York therefore does not validate the law if
it regulates the out-of-state transactions of distillers who sell in-state.”). Section
905.1 plainly violates this principle to the extent it applies to “the price that a
contact lens retailer charges or advertises for contact lenses” to consumers in other
States. That is, even if Section 905.1 could be justified insofar as it regulates the
prices paid by Utah consumers, it plainly goes too far in giving 1-800 CONTACTS
and other “Utah retailers” a free pass with respect to their sale or advertising
conduct in Arizona, Washington, Rhode Island, New York, or Florida—each of
which has declined to enact a proposed contact lens pricing law similar in kind to
Section 905.1. The statute goes even further insofar as the State chooses to define
“Utah retailer” to include any national retailer (such as Intervenor Costco) that has
distribution facilities in Utah.
Third, the district court erred in failing to find that Section 905.1
discriminates in favor of Utah’s in-state economic interests and against out-of-state
economic interests. Section 905.1 favors Utah retailers over out-of-state
manufacturers by taking the right to set prices away from the manufacturers and
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giving it to the retailers. The statute also favors Utah retailers over non-Utah
retailers by giving the former, but not the latter, a special exemption from
manufacturers’ pricing policies.
The district court excused these discriminatory effects by looking past the
specific features of Section 905.1 and characterizing the statute as a typical
antitrust law, but this too was error. Section 905.1 is unlike a typical antitrust law
in several ways—most notably, it is addressed to only one industry rather than “all
businesses in the marketplace,” see Oneok, Inc. v. Lear-Jet, Inc., 135 S. Ct. 1591,
1601 (2015), and it marks out for civil sanctions the very unilateral decisionmaking that marketplace “competition assumes and demands.” Copperweld Corp.
v. Independence Tube Corp., 467 U.S. 752, 768-69 (1984). Further, no case holds
that a State may discriminate in favor of local businesses in order to pursue
purported “antitrust” policy. The dormant Commerce Clause does not take a
backseat to a state’s novel view of antitrust law.
Fourth, the district court erred in holding that the local benefits justify the
burdens on interstate commerce. Here again, the district court erred in assuming
that Section 905.1 was ordinary antitrust law and disregarding the State’s unique
attempt to affect prices in all 50 states.
Finally, the district court erred in ruling that the other preliminary injunction
factors weighed against injunctive relief. This error was derivative of the
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erroneous Commerce Clause ruling. There is no serious dispute that a law that
violates the dormant Commerce Clause must be enjoined.
For these reasons, this Court should reverse the decision below and hold that
a preliminary injunction should issue enjoining enforcement of Section 905.1.
STANDARD OF REVIEW
To obtain a preliminary injunction, the moving party must establish: “(1) a
likelihood of success on the merits; (2) a likely threat of irreparable harm to the
movant; (3) the harm alleged by the movant outweighs any harm to the nonmoving party; and (4) an injunction is in the public interest.” Hobby Lobby Stores,
Inc. v. Sebelius, 723 F.3d 1114, 1128 (10th Cir. 2013). This Court reviews the
denial of a motion for a preliminary injunction for abuse of discretion, id., and
examines the district court’s factual findings for clear error. Legal determinations,
in contrast, are reviewed de novo. Greater Yellowstone Coal. v. Flowers, 321 F.3d
1250, 1255 (10th Cir. 2003). “A district court necessarily abuses its discretion
when it commits an error of law,” and a preliminary injunction decision “that is
premised on an error of law is entitled to no deference and must be reversed.”
Bhd. of Maint. of Way Employes Div./IBT v. Union Pac. R.R. Co., 460 F.3d 1277,
1282 (10th Cir. 2006) (quotation marks omitted).

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ARGUMENT
I.

The District Court Misapplied Established Standards for Weighing PreEnforcement Constitutional Challenges to Statutes.
When a plaintiff brings a pre-enforcement challenge to the constitutional

validity of a statute, the usual course is that the agency charged with enforcing the
statute will construe the statute, articulating its scope. See, e.g., Vill. of Hoffman
Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494 n.5 (1982) (“In
evaluating a facial challenge to a state law, a federal court must, of course,
consider any limiting construction that a state court or enforcement agency has
proffered.”); Quik Payday, Inc. v. Stork, 549 F.3d 1302, 1308 (10th Cir. 2008)
(relying on representations by Kansas banking officials as to the reach of a state
law challenged on Commerce Clause grounds). If no such agency statement is
forthcoming, or if the court finds the agency’s construction implausible, the court
will construe the statute itself, including by applying the constitutional avoidance
canon as appropriate. See, e.g., Buckley v. Valeo, 424 U.S. 1, 80 (1976); cf. Beach
Commc’ns, Inc. v. F.C.C., 959 F.2d 975, 980-87 (D.C. Cir. 1992).
Here, neither event occurred. The Utah Attorney General did not say
whether Section 905.1 would require JJVCI to continue selling contact lenses
across state lines to “Utah retailers” that sell below the UPP minimum price. He
also did not state clearly whether the statute applies to sales that a “Utah retailer”
makes to consumers in other States.
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The district court also declined to provide an interpretation of the statute.
That is, while the district court cited canons of construction, A-767, A-771, it did
not actually apply those canons or otherwise adopt its own interpretation. Instead,
the district court adopted a blanket presumption that “the Utah Attorney General
will enforce the statute in a manner that does not violate the Commerce Clause,”
A-771, and indicated that the State should be permitted to “offer its interpretation
of the statute in connection with an actual enforcement action.” A-770.
This approach was directly contrary to the established rule that a plaintiff
does not have to risk state-court enforcement before it may go to federal court to
challenge the constitutionality of a “statute whose scope is unclear.” Kansas
Judicial Review v. Stout, 519 F.3d 1107, 1118 (10th Cir. 2008). Indeed, the
Supreme Court has held that plaintiffs threatened with unconstitutional state action
may bring pre-enforcement suits for injunctive relief against state officials in part
to ensure the availability of federal court review in circumstances much like these.
See Ex parte Young, 209 U.S. 123, 160-62, 165 (1908) (affirming federal
jurisdiction over pre-enforcement suit contending that Minnesota statute regulating
railroad shipping rates violated the Commerce Clause and Due Process).
That principle is not limited to statutes like the one at issue in Ex parte
Young, which are punishable by a term of imprisonment. In civil cases, too,
“where threatened action by government is concerned, [courts] do not require a
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plaintiff to expose himself to liability before bringing suit to challenge the basis for
the threat”; a plaintiff need not “bet the farm, so to speak” before bringing a
constitutional challenge to a civil law that threatens its property rights or liberty to
operate its business. See MedImmune, 549 U.S. at 128-29 (citing cases); see also
Terrace v. Thompson, 263 U.S. 197, 214 (1923) (courts may “enjoin the threatened
enforcement of a state law which contravenes the federal Constitution wherever it
is essential in order effectually to protect property rights and the rights of persons
against injuries otherwise irremediable”).
In keeping with this rule, the Supreme Court has indicated that an agency’s
refusal to say whether it would bring an enforcement action operates as an
admission, for purposes of the litigation, that the plaintiff’s planned conduct is
within the reach of the statute and would likely be a subject of an enforcement
action. For example, in Holder v. Humanitarian Law Project, 561 U.S. 1 (2010),
the Supreme Court addressed First Amendment and due process challenges to a
federal law banning the provision of “material support” to a designated “foreign
terrorist organization.” Id. at 9-10. The plaintiffs declared that they wished to
work together with certain designated organizations on non-violent aspects of their
activities, and claimed a constitutional right to do so. Id. at 14-15. The
government refused to say, either way, whether it would prosecute the plaintiffs if
they took such acts. Id. at 16. Faced with this circumstance, the Supreme Court
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held that the plaintiffs “should not be required to await and undergo a criminal
prosecution as the sole means of seeking relief.” Id. at 15 (internal quotation
marks omitted). The Court instead addressed the merits of the plaintiffs’
constitutional claims.
The district court should have followed a similar approach rather than
leaving JJVCI a “choice between abandoning [its] rights or risking prosecution.”
See MedIummune, 549 U.S. at 129. The district court’s flawed response to the
State’s equivocation compounded other errors in its constitutional analysis.
II.

The District Court Misapplied Established Commerce Clause
Standards.
The dormant Commerce Clause doctrine has “deep roots” and plays a

critical role in the constitutional law of the United States. Comptroller of the
Treasury of Md. v. Wynne, 135 S. Ct. 1787, 1794 (2015). It reflects “the
Constitution’s special concern both with the maintenance of a national economic
union unfettered by state-imposed limitations on interstate commerce and with the
autonomy of the individual States within their respective spheres,” Healy, 491 U.S.
at 335-36, and thus “strikes at one of the chief evils that led to the adoption of the
Constitution, namely, state tariffs and other laws that burdened interstate
commerce.” Wynne, 135 S. Ct. at 1794.
Cases addressing the dormant Commerce Clause have at times employed
differing terminology in an effort to capture the many ways that a State can violate
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Commerce Clause strictures. In fact, this Court’s recent Commerce Clause cases
have alternatively described the Supreme Court’s precedents as applying a “two
tiered approach,” see Kleinsmith v. Shurtleff, 571 F.3d 1033, 1039 (10th Cir. 2009)
(quoting Brown-Forman, 476 U.S. at 578), or a three-prong analysis, see KT&G
Corp. v. Att’y Gen. of Okla., 535 F.3d 1114, 1143 (10th Cir. 2008). The precise
manner of grouping the Supreme Court’s controlling precedents is not critical
because the “Commerce Clause jurisprudence is not so rigid as to be controlled by
the form by which a State erects barriers to commerce. Rather our cases have
eschewed formalism for a sensitive, case-by-case analysis of purposes and effects.”
W. Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 201 (1994).
The ultimate question is whether Section 905.1 can be upheld as consistent
with the basic principles that a State cannot exercise its police powers in a manner
that, in “practical effect,” conflicts with (1) the exclusive power of Congress to
regulate the national economy or (2) the coordinate power of other States to
regulate matters within their own borders. See Healy, 491 U.S. at 336-37.
It cannot. Section 905.1 singles out one class of inherently interstate
transactions for regulation by Utah, and it mandates that out-of-state manufacturers
ship their products into Utah in order to benefit in-state retailers. The statute also
uniquely empowers “Utah retailers” to sell contact lenses to consumers in other
States at prices made possible only through the intervention of the Utah legislature.
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These “practical effects” bring Section 905.1 squarely into conflict with
established Commerce Clause principles.
A.

The District Court Erred in Failing To Apply the “Direct
Regulation” Prong of the Commerce Clause Analysis.

It is undisputed that every single contact lens manufacturer is located outside
Utah. A-725. As interpreted by the State, Section 905.1 regulates commercial
conduct between these out-of-state manufacturers and “Utah retailers.” A-842. A850. The statute does not regulate any intrastate transactions. It is thus clear that
Section 905.1 directly regulates interstate commerce.
Moreover, the statute requires the sale of goods across state lines. The law
can be enforced against an out-of-state manufacturer only in one of two ways.
First, the “attorney general may . . . seek an injunction” compelling a contact lens
manufacturer to ship its products across state lines to an in-state retailer (or
forbidding it from declining to do so). See Utah Code Section 58-16a-906(2).
Second, the “attorney general may . . . bring a civil action” or “a civil penalty
against any person who violates” the statute by refusing to ship contact lenses
across state lines. Id.
This is a direct regulation of interstate commerce. Utah law is dictating the
terms of manufacturer-retailer transactions in a single industry in which every such
transaction that touches Utah crosses a state line, and is mandating that out-of-

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State manufacturers continue to sell goods to “Utah retailers” in circumstances
when they would otherwise stop.
Supreme Court precedent is clear that the statute is per se unconstitutional.
“When a state statute directly regulates or discriminates against interstate
commerce,” the Supreme Court has “generally struck down the statute without
further inquiry.” Brown-Forman, 476 U.S. at 579; see also Edgar, 457 U.S. at 640
(plurality) (“The Commerce Clause . . . permits only incidental regulation of
interstate commerce by the States; direct regulation is prohibited.”); Shafer v.
Farmers Grain Co., 268 U.S. 189, 199 (1925) (“a state statute which by its
necessary operation directly interferes with or burdens [interstate] commerce is a
prohibited regulation and invalid, regardless of the purpose with which it was
enacted”).4
Accordingly, “a State is without power to prevent privately owned articles of
trade from being shipped and sold in interstate commerce on the ground that they
are required to satisfy local demands or because they are needed by the people of
the State.” New England Power Co. v. New Hampshire, 455 U.S. 331, 338 (1982)
4

Some cases describe state regulation of the interstate movement of goods and
services as a “discriminate[ion] against interstate commerce,” see C&A Carbone,
511 U.S. at 390, whereas others speak of “direct regulation,” see Shafer, or use
both terms in the same breath. See Brown-Forman, 476 U.S. at 579. We use the
phrase “direct regulation” to more readily distinguish this form of forbidden
regulation from the distinct—but equally invalid—practice of discriminating in
favor of in-state entities. See Section II.C., infra.
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(striking down state constraint on export of hydroelectric power); see also Hughes
v. Oklahoma, 441 U.S. 322, 336-37 (1979) (ban on minnow export held invalid).
Nor may a State enact laws designed to keep out commercial goods that originate
in another State. See, e.g., Or. Waste Sys., Inc., v. Dep’t of Envtl. Quality, 511 U.S.
93 (1994); Philadelphia, 437 U.S. at 624 (“a law that overtly blocks the flow of
interstate commerce at a State’s borders” is the “clearest example” of law that is
per se invalid under the Commerce Clause).5
Likewise, a State may not use its regulatory powers to effect a “diversion of
interstate commerce” from other States to its own, as the Supreme Court held in
striking down a New York tax measure that sought to leverage New York’s “power
to tax an in-state operation as a means of requiring other business operations to be
performed in” New York. Bos. Stock Exch., 429 U.S. at 336-37; see also C&A
Carbone, Inc., 511 U.S. at 392 (striking down municipal law requiring trash
processing functions to be performed by local private company); Foster-Fountain
Packing Co. v. Haydel, 278 U.S. 1 (1928) (striking down Louisiana law aimed at
requiring relocation of shrimp processing services from Mississippi plant).
5

There is a narrow exception to this rule for quarantine measures aimed at “articles
such as diseased livestock that required destruction as soon as possible because
their very movement risked contagion and other evils,” and thus “did not
discriminate against interstate commerce as such, but simply prevented traffic in
noxious articles, whatever their origin.” Philadelphia, 437 U.S. at 628-29. Utah
does not claim that Section 905.1 supports any similar public health interest and
could not plausibly do so. Utah requires that contact lenses be shipped into the
state so 1-800 CONTACTS can ship them back out across the country.
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Section 905.1 is a more extreme version of the kind of law struck down in
Boston Stock Exchange. Rather than using tax policy to steer commercial traffic
toward local businesses, Utah has by fiat directed that contact lens manufacturers
must sell their products to “Utah retailers,” even if these “Utah retailers” sell those
lenses under terms that are inconsistent with the manufacturers’ respective
business objectives.
At the preliminary injunction hearing, the district court engaged in a lengthy
exchange with counsel for JJVCI on the prohibition against “direct regulation” of
interstate commerce by a State. See A-803 – A-806. Nonetheless, the district
court’s opinion failed to even mention “direct regulation.” Its failure to do so
warrants reversal. This is particularly true because neither the State nor
Intervenors has thus far responded in any meaningful way to this argument. That
is, despite much evasion and equivocation, they ultimately do not address, and
therefore do not deny, that Section 905.1 will in “practical effect” mandate crossborder sales of contact lenses from JJVCI’s Florida manufacturing locations to 1800 CONTACTS and other “Utah retailers.” Section 905.1 is plainly
unconstitutional.
B.

The District Court Erred in Treating Section 905.1’s Patently
Extraterritorial Effects as Likely Permissible.

The Supreme Court has long held that the dormant Commerce Clause is
violated when “the practical effect of the [state] regulation is to control conduct
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beyond the boundaries of the State.” Healy, 491 U.S. at 336 (emphasis added); see
also Brown-Forman, 476 U.S. at 583 (citing Southern Pac. Co. v. Arizona ex rel.
Sullivan, 325 U.S. 761, 775 (1945)). Just as “New York has no power to project its
legislation into Vermont by regulating the price to be paid in that state for milk
acquired there,” Baldwin v. GAF Seelig, Inc., 294 U.S. 511, 521 (1935), Utah has
no power to project its regulation into other states by regulating the price to be paid
there for contact lenses.
Yet Section 905.1 does precisely that: It bars out-of-state manufacturers
from taking actions that affect prices paid by out-of-state consumers. Neither
JJVCI nor any other contact lens manufacturer is based in Utah or makes any
business decisions in Utah. Further, approximately 99% of ACUVUE® lens sales
go to consumers outside the State of Utah. A-252. Indeed, about 99% of 1-800
CONTACTS sales of ACUVUE® lenses go to consumers in other states. Id.
Nonetheless, Section 905.1 purportedly controls actions taken outside Utah by
non-Utah manufacturers, in respect to sales to non-Utah consumers. Under any
practical understanding, that is an extraterritorial regulation.
The extraterritorial scope of the statute is compounded by the unnaturally
broad scope of the term “Utah retailer.” The State is somewhat coy about defining
what it means by “Utah retailer,” but it appears to view this term as encompassing
any retailer who sells or ships from a Utah location, such as Costco, which is a
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Washington-based company. See A-844 – A-848; A-407 – A-408. At argument,
1-800 CONTACTS contended that “Wal-Mart, Target, Sears, Walgreens” and
others were also “Utah retailers” because they “all are making retail sales in Utah,”
notwithstanding that every one of those companies is headquartered and based
outside of the State. A-850.
The mere existence of operational facilities in Utah is insufficient to shield
the statute from constitutional challenge. What matters is whether in “practical
effect” the statute regulates extraterritorially, not whether it also has some “nexus”
to the regulating state. In Wynne, for instance, Maryland had a clear taxing
“nexus” with respect to in-state residents, but the Supreme Court still struck down
its malapportioned tax levy. 135 S. Ct. at 1799 (emphasis added). Likewise, in
ACLU v. Johnson, 194 F.3d 1149 (10th Cir. 1999), this Court invalidated a New
Mexico statute regulating Internet communications despite a clear “nexus” to the
state. The State contended that the statute was addressed only to “intrastate
communications . . . from one New Mexican to another New Mexican,” and
therefore did not regulate extraterritorially. Id. at 1161. This proposed “nexus”
was held insufficient given “the nature of the Internet.” Id. Such a statute “cannot
effectively be limited to purely intrastate communications over the Internet
because no such communications exist.” Id.

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If an in-state nexus were sufficient, the laws struck down in Seelig, Healy,
and Brown-Forman all would have been upheld. In each case, the State could have
(and did) point to the fact that the challenged regulation was in formal terms
imposed on in-State conduct. For example, in Seelig, New York argued that it was
merely “prohibiting [the] sale” in New York of milk that had been purchased in
Vermont for the wrong price: “The importer in that view may keep his milk or
drink it, but sell it he may not.” Seelig, 294 U.S. at 521. The Supreme Court had
no trouble dispatching that argument because the practical effect was clear. New
York’s policy effectively and invalidly governed prices in Vermont.
The same is true here. The practical effect of Section 905.1 is to regulate the
prices that out-of-state consumers, in all 50 states, pay for contact lenses made by
an out-of state manufacturer. This extraterritorial effect is all the more pronounced
because 99% of ACUVUE® lenses are sold to consumers in other States.
To be sure, the Utah Attorney General refuses to confirm that it will enforce
Section 905.1 when sales are made to consumers outside of Utah. Compare A-407
(“[A] contact lens retailer located in the State of Utah that sells only to customers
who reside within the [S]tate of Utah falls within the statute’s purview. It is not a
violation of the Commerce Clause for the State of Utah to require contact lens
manufactures to allow an optometrist located in the State of Utah to set the prices
he or she wishes to sell contact lenses to the retailer’s Utah customers.”), with ECF
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No. 01019435806, at 12 (arguing that “there is no basis” for limiting Section 905.1
to Utah consumers), and A-486 (“I have to be dead honest with Your Honor that I
don’t know” whether Section 905.1 will be enforced based on prices paid by Utah
consumers). But the State does not deny that the statute reaches sales to out-ofstate consumers; and 1-800 CONTACTS avers that the statute does in fact apply to
those sales. See, e.g., A-455. The State’s equivocation about how it will enforce
the statute does not alter the scope of the statute itself, nor its “practical effect,”
which is to regulate the prices paid by out-of-state consumers for contact lenses
made by out-of-state manufacturers, purchased online from a “Utah retailer”, and
then shipped through interstate commerce to locations in other states. That plainly
amounts to an extraterritorial regulation, contrary to the district court’s conclusion.
See A-766—A767.
C.

The District Court Erred In Seeking to Justify Section 905.1’s
Facial Discrimination Against Interstate Commerce.
1.

Section 905.1 discriminates against both out-of-state
manufacturers and out-of-state retailers.

Section 905.1 also discriminates against interstate commerce, in violation of
the “virtually per se” rule that a State may not adopt laws that give rise to
“differential treatment of in-state and out-of-state economic interests that benefits
the former and burdens the latter.” See United Haulers Ass’n v. Oneida-Herkimer
Solid Waste Mgmt. Auth., 550 U.S. 330, 338 (2007). “This rule is essential to the
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foundations of the Union. . . . States may not enact laws that burden out-of-state
producers or shippers simply to give a competitive advantage to in-state
businesses.” Granholm v. Heald, 544 U.S. 460, 472 (2005).
A law that discriminates in these terms may be upheld only following “the
strictest scrutiny of any purported legitimate local purpose.” Hughes, 441 U.S. at
337. Critically, the “absence of nondiscriminatory alternatives” must also be
established as part of this strict scrutiny analysis, id., which is ultimately aimed at
examining whether the suspect act of “discrimination is demonstrably justified by a
valid factor” that is ”unrelated to economic protectionism.” KT&G Corp., 535
F.3d at 1143 (emphasis added). Section 905.1 plainly discriminates in favor of instate interests—i.e., “Utah retailers,” and just as plainly fails the resulting strict
scrutiny analysis. The district court erred in reaching a contrary conclusion. See
A-767 – A-771.
Section 905.1 discriminates in favor of Utah’s in-state economic interests in
two respects.
First, Section 905.1 takes pricing authority away from out-of-state
manufacturers and gives it to in-state retailers. It is irrelevant that the statute, “read
literally,” makes no facial distinction between in-state and out-of-state
manufacturers. A-767. A discriminatory “effect,” no less than discriminatory
wording, “renders [a state statute] unconstitutional.” W. Lynn Creamery, Inc., 512
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U.S. at 196; see also Healy, 491 U.S. at 336 (Commerce Clause inquiry focuses on
the “practical effect” of the challenged law); Brown-Forman, 476 U.S. at 583
(same); S. Pac. Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 775 (1945) (same).
Section 905.1 plainly discriminates in these terms. All manufacturers that lose
pricing authority are located in other States, and all retailers that gain pricing
authority have retail or shipping facilities inside Utah.
Second, Section 905.1 impermissibly confers on Utah retailers a special
exemption from manufacturers’ pricing policies that no other retailers enjoy.
JJVCI’s UPP, and the pricing policies of other manufacturers, apply nationwide to
all retailers, regardless of where they are located. Under Section 901.5,
manufacturers must treat Utah retailers differently from other retailers. This stateimposed obligation to give preferential treatment to Utah retailers violates the
Constitution. See, e.g., United Haulers Ass’n, 550 U.S. at 338 (prohibiting
“differential treatment of in-state and out-of-state economic interests that benefits
the former and burdens the latter”) (quoting Or. Waste Sys., Inc., 511 U.S. at 99).
Contrary to the district court, the fact that manufacturers could in theory
address this clear-cut discriminatory effect by abandoning their pricing policies
nationwide does not save Section 905.1. If a state statute produces a
discriminatory effect under existing market conditions, the ability of a private party
to respond by changing its own behavior “[does] not immunize [the]
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discriminatory measure.” See W. Lynn Creamery, 512 U.S. at 194-95 (finding it
irrelevant that out-of-state companies could “remain competitive” if they
responded to a discriminatory law “by lowering their prices”). The discrimination
inquiry takes market conditions as they are, not as the regulating state wishes they
were. See also New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 274 (1988)
(state statute was unconstitutional even where discriminatory effect could have
been eliminated by sister state’s actions).
2.

The district court erred in finding that Section 905.1 could not
be discriminatory because it is an antitrust statute.

The district court also erred in suggesting that Section 905.1 could not be
discriminatory because it is “nothing more than a state antitrust statute, tailored to
a specific industry, which the state has the power to enact.” A-769. In particular,
the district court treated Section 905.1 as analogous to the statute upheld in Exxon
Corp. v. Governor of Maryland, 437 U.S. 117 (1978):
In Exxon, the statute required producers to provide uniform discounts to all
service stations. Here, the statute merely requires that manufacturers refrain
from mandating price fixing within the state of Utah and from discriminating
against Utah retailers for reasons related to price fixing. This Utah statute,
like the statute in Exxon, appears to be an appropriately tailored antitrust
statute within the legislative authority of the state.
A-769 – A-770. This analysis is incorrect in three ways: (1) Exxon is inapposite,
(2) dormant Commerce Clause standards are not relaxed for state antitrust laws,
and (3) Section 905.1 is not a typical antitrust statute.
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First, the district court’s reliance on Exxon is misplaced. Exxon did not
address whether the statutory provision requiring uniform discounts was consistent
with the dormant Commerce Clause. Rather, it held only that this requirement was
not preempted by the federal Robinson-Patman Act. 437 U.S. at 133-34. The
Court’s dormant Commerce Clause analysis was limited to a separate provision
that prohibited oil producers and refiners from operating retail service stations
within the Maryland. Id. at 125-29. Although the Court held that this latter
provision was not discriminatory, it did so on the ground that “in-state independent
dealers [would] have no competitive advantage over out-of-state dealers.” Id. at
126. Here, by contrast, Section 905.1 gives a clear competitive advantage to instate retailers over out-of-state retailers.
Second, the district court’s assumption that antitrust laws cannot violate the
Dormant Commerce Clause is misguided. The Supreme Court has never held or
remotely suggested that a State’s power to enact antitrust regulation trumps the
dormant Commerce Clause. Indeed, the case relied on by the district court,
California v. ARC America, 490 U.S. 93 (1989), is not even a dormant Commerce
Clause case. It merely held that federal law does not preempt the entire field of
antitrust law.
To be sure, states have general police power to adopt antitrust laws. But
virtually all dormant Commerce Clause cases address limitations on police
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powers—including core State powers, such as the powers to tax and to spend. See,
e.g., Wynne, 135 S. Ct. at 1799 (invalid taxation of residents’ income); W. Lynn
Creamery, 512 U.S. at 199 (tax-and-subsidy scheme invalid even though “direct
subsidization of domestic industry does not ordinarily run afoul” of the Commerce
Clause) (quotation marks omitted); C&A Carbone, 511 U.S. at 389 (regulation of
trash disposal struck down). In such cases, courts apply ordinary Commerce
Clause principles in evaluating laws that “attempt[] to remedy a significant market
issue,” A-769, and will strike them down if they are inconsistent with those
standards. See, e.g., Seelig, 294 U.S. at 522-24 (aim of protecting New Yorkers
from unfair competition did not justify direct regulation of interstate commerce);
Limbach, 486 U.S. at 274 (state’s contention that statute promoted interstate
commerce could not justify discrimination against out-of-state economic interests);
Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 352-53 (1977) (“[T]he
challenged statute cannot stand . . . even if enacted for the declared purpose of
protecting consumers from deception and fraud in the marketplace.”); Pharm.
Research & Mfrs. of Am. v. Dist. of Columbia, 406 F. Supp. 2d 56, 67-71 (D.D.C.
2005), aff’d sub nom. Biotech. Indus. Org. v. Dist. of Columbia, 496 F.3d 1362
(Fed. Cir. 2007); Globe Glass & Mirror Co. v. Brown, 917 F. Supp. 447, 452-55
(E.D. La. 1996).

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Third, even if classifying a discriminatory state law as relating to antitrust
concerns is somehow relevant to the constitutional inquiry, the district court failed
to consider the many ways in which Section 905.1 is not a typical “antitrust”
statute.6 The district court erred in suggesting that it is somehow typical for a
“state antitrust statute” to be “tailored to a specific industry.” A-769. To the
contrary, state “[a]ntitrust laws” are “not aimed at” one industry “in particular, but
rather all businesses in the marketplace.” Oneok, Inc., 135 S. Ct. at 1601
(emphasis added). The district court also failed to consider that, unlike typical
antitrust law, Section 905.1 prohibits unilateral pricing policies—policies that have
always been legal under both federal and state antitrust law, and as wholly distinct
from agreements with respect to price. See, e.g., United States v. Colgate & Co.,
250 U.S. 300, 307 (1919); PSKS, Inc. v. Leegin Creative Leather Products, Inc.,
615 F.3d 412, 419 (5th Cir. 2010); Chavez v. Whirlpool Corp., 93 Cal. App. 4th
363, 370 (Cal. Ct. App. 2001).
6

Section 905.1 also is not comparable to the state statutes cited below by 1-800
CONTACTS as addressing resale price maintenance. See A-448-49 n.22. Most of
these laws are expressly addressed to price-setting within state-created franchise
relationships, which are at not at issue here. See, e.g., Utah Code Ann. § 13-14201(1) (applies to motor fuel franchises); R.I. Gen Laws Ann. § 5-55-4 (same); Or.
Rev. Stat. Ann. § 650.205 (same). These laws, moreover, are addressed to
quintessentially local gas pump transactions wholly unlike 1-800 CONTACTS’
nationwide Internet sales. And unlike Section 905.1, none of these measures
contains a “keep selling” mandate. See, e.g., People v. Tempur-Pedic Int’l, Inc., 95
A.D.3d 539 (N.Y. App. Div. 2012) (N.Y. Gen. Business Law § 369-a “does not
make [resale price maintenance] illegal as a matter of law,” but simply makes
certain “contract provisions” “unenforceable in the courts of this state”).
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The district court was also wrong to dismiss as “premature and speculative”
the manufacturers’ argument that, unlike traditional antitrust law, Section 905.1
requires an out-of-state manufacturer to continue selling to an in-state retailer with
whom the manufacturer wishes to cease doing business. See A-770. When the
scope of a statute is unclear, a court should not deny a pre-enforcement challenge
on the presumption that the statute will be enforced constitutionally. See Kansas
Judicial Review, 519 F.3d at 1118. That is especially true where, as here, the
language of the statute justifies the manufacturers’ concern. The statute provides,
“A contact lens manufacturer . . . may not . . . discriminate against a contact lens
retailer based on whether the contact lens retailer . . . sells or advertises contact
lenses for a particular price.” A-314. The State has never sought to explain what
this language could mean, if not that it prohibits JJVCI and other manufacturers
from ceasing shipments to a Utah retailer based on that retailer’s violation of
manufacturer pricing policies. And 1-800 CONTACTS, whose business model
this law was designed to protect, affirmatively argues that Section 905.1 requires
manufacturers to continue selling to 1-800 CONTACTS, at least so long as they
are selling to anyone in Utah.7 See, e.g., A-445—A-446.

The district court badly missed the mark in suggesting that Section 905.1 is not
likely to “impermissibly compel[] or [a]ffect[] interstate commerce” because a
2006 Utah statute “already expressly penalizes contact lens manufacturers that fail
to make contact lenses available to retailers in a nondiscriminatory and
commercially reasonable manner.” See A-770. The 2006 law, Utah Code § 587

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Finally, the district court failed to apply the rule that a law that discriminates
in favor of in-state businesses can be upheld only if it satisfies strict scrutiny. See,
e.g., Hughes, 441 U.S. at 337; Or. Waste Sys., Inc., 511 U.S. at 101 (“The State’s
burden of justification is so heavy that facial discrimination by itself may be a fatal
defect.”) (quotation marks omitted); KT&G Corp., 535 F.3d at 1143. The district
court did not and could not have aptly held that Utah has a valid interest in giving
Utah retailers a commercial advantage over out-of-state entities. Nor did the
district court even begin to address whether Utah could have achieved its
ostensible aims through “nondiscriminatory alternatives.” Hughes, 441 U.S. at
337. For all of these reasons, the district court erred, and accordingly abused its
discretion, in rejecting JJVCI’s discrimination argument.
D.

The District Court Overlooked the Plainly Excessive Burden That
Section 905.1 Imposes on Interstate Commerce.

Even if Section 905.1 were not a per se violation of the Dormant Commerce
Clause, it is unconstitutional under Pike v. Bruce Church, Inc., 397 U.S. 137, 142
(1970), which holds that a state statute that is not invalid per se will be struck
16a-904, prohibits discrimination among categories of retailers: “(a) prescribers;
(b) entities associated with prescribers; and (c) alternative channels of
distribution.” Moreover, the 2006 law expressly permits manufacturers to draw
“commercially reasonable” distinctions between retailers. Section 905.1 goes
much further. It bans manufacturers from “discriminating” against individual
retailers who choose to sell contact lenses on terms that the manufacturers deem
harmful to their commercial interests. There is simply no equivalence between the
2006 law and Section 905.1—as evidenced by 1-800 CONTACTS’ lobbying
campaign for a new set of restrictions.
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down if it imposes “a burden on interstate commerce that is ‘clearly excessive in
relation to the putative local benefits.’” Quik Payday, Inc., 549 F.3d at 1309
(quoting Pike, 397 U.S. at 142). Burdens relevant to the Pike inquiry “include the
disruption of interstate travel and shipping due to a lack of uniformity in state laws,
impacts on commerce beyond the borders of the defendant State, and impacts that
fall more heavily on out-of-state interests.” V-1 Oil Co. v. Utah State Dep’t of
Pub. Safety, 131 F.3d 1415, 1425 (10th Cir. 1997) (alterations and internal
quotation marks omitted).
Here, the district court erroneously equated the benefits and burdens of
Section 905.1 with the benefits and burdens of antitrust law generally. In so doing,
it ignored key differences between typical antitrust law and Section 905.1, thereby
exaggerating the benefits, understating the burdens, and getting the balance wrong.
See A-771—A-772.
The only putative local benefit the district court identified was Costco’s
assertion that Section 905.1 “would return intrabrand competition to the Utah
contact lens marketplace, allowing Utah contact lens retailers to provide lower
prices to Utah consumers.” A-771. This, according to the district court, is
“exactly the type of benefit states are permitted to advance through state antitrust
laws.” Id.

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Contrary to the district court’s presumption, the legislative history of Section
905.1 demonstrates that Utah’s true aim was to protect 1-800 CONTACTS’
business model. That is indisputably not “exactly the type of benefit” antitrust law
promotes. See Geneva Pharms. Tech. Corp. v. Barr Labs, Inc., 386 F.3d 485, 507
(2d Cir. 2004) (antitrust law aims to promote competition in the market “as a
whole,” rather than to prevent harm to “individual competitors”). It is instead the
kind of parochial legislation that the dormant Commerce Clause rejects.
The district court also erred in suggesting that promoting “intrabrand”
competition is a core concern of antitrust law. It is the “promotion of interbrand
competition” that is “the primary purpose of the antitrust laws.” Leegin Creative
Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 890 (2007) (emphasis added); see
also Westman Comm’n Co. v. Hobart Int’l., Inc., 796 F.2d 1216, 1229 (10th Cir.
1986) (the antitrust “evil to be avoided is the reduction of interbrand competition
between the manufacturer’s distributors, not the reduction of intrabrand
competition”); Smith Mach. Co., Inc. v. Hesston Corp., 878 F.2d 1290, 1295 (10th
Cir. 1989) (similar). That, in turn, is why the Supreme Court held that minimum
resale price maintenance can be good for competition even though it tends to
“reduc[e] intrabrand competition.” Leegin, 551 U.S. at 890. The practice “can
stimulate interbrand competition—the competition among manufacturers selling
different brands of the same type of product.” Id.
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Finally, as discussed, Section 905.1 is unlike a traditional antitrust law in
other respects. It conflicts with the core interests of traditional competition law in
that it targets, through its prohibition on unilateral price setting, the very
“independent centers of decisionmaking that competition assumes and demands.”
See Copperweld Corp., 467 U.S. at 768-69. And in contrast to traditional state
antitrust laws, which apply to “all businesses in the marketplace,” see Oneok, 135
S. Ct. at 1593, Section 905.1 is aimed at a single industry, comprised solely of outof-State manufacturers.
III.

The District Court Misapplied The Remaining Elements of the
Injunction Standard.
The district court’s analysis of the remaining preliminary injunction factors

was derivative of its erroneous merits analysis. See, e.g., A-772 – A-773 (“these
constitutional injuries are speculative at this stage, and, as such, Plaintiffs have
failed to establish injuries that are certain, actual and imminent.”). As such, the
district court erred in its analysis of these factors as well.
A.

JJVCI Demonstrated That It Would Suffer Irreparable Harm As
A Matter of Law.

JJVCI will suffer irreparable harm if Section 905.1 is not preliminarily
enjoined. This Court’s decision in ACLU v. Johnson is directly controlling:
“[d]eprivation of the rights guaranteed under the Commerce Clause constitutes
irreparable injury.” 194 F.3d at 1163 (quoting Am. Libraries Ass’n v. Pataki, 969
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F. Supp. 2d 160, 168 (S.D.N.Y. 1997)). Absent an injunction, JJVCI will suffer
constitutional injury.
In addition, JJVCI will suffer substantial economic harm unless a
preliminary injunction is granted. If Section 905.1 remains in effect, JJVCI could
be forced to expend funds defending an enforcement action, or even to satisfy a
resulting civil penalty award. A-298. JJVCI “would be forced to abandon or
drastically curtail its UPP.” Id. Because Section 905.1 evidently applies even to
retail prices are paid by non-Utah consumers, the statute will impact JJVCI’s
nationwide operations unless enjoined. Id. At the very least, JJVCI would be
forced to redesign its pricing policies with respect to Utah sales. Id. This forced
modification of JJVCI’s business relationships with distributors, retailers, and
customers is itself a substantial harm.
Economic losses are not always viewed as irreparable, but would be here
because the Eleventh Amendment and Utah’s sovereign immunity would prevent
JJVCI from recovering damages against Utah for enacting and enforcing Section
905.1. See Kan. Health Care Ass’n v. Kan. Dep’t of Soc. & Rehab. Servs., 31 F.3d
1536, 1543 (10th Cir. 1994). For that very reason, this Court has held that
“[i]mposition of monetary damages that cannot later be recovered for reasons such
as sovereign immunity constitutes irreparable injury.” Chamber of Commerce of
U.S. v. Edmondson, 594 F.3d 742, 770-71 (10th Cir. 2010); accord Johns v.
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Stewart, 57 F.3d 1544, 1553-54 (10th Cir. 1995). Accordingly, any harm to JJVCI
would be irreparable.
B.

JJVCI Demonstrated That the Balance of Equities And Public
Interest Weigh Strongly In Favor of a Preliminary Injunction.

The final two prongs—balance of the equities and consideration of the
public interest—“merge” into one where a governmental entity is the party
opposing preliminary relief. See Nken v. Holder, 556 U.S. 418, 435 (2009). Here,
those factors weigh heavily in favor of injunctive relief. As this Court has held, it
is “always in the public interest to prevent the violation of a party’s constitutional
rights,” Awad v. Ziriax, 670 F.3d 1111, 1132 (10th Cir. 2012) (internal quotation
marks omitted); see also Edmondson, 594 F.3d at 771 (“[T]he public interest will
perforce be served by enjoining the enforcement of the invalid provisions of state
law.”) (quoting Bank One v. Guttau, 190 F.3d 844, 848 (8th Cir. 1999)). That
should be the end of the analysis.
Insofar as the district court suggested that laws that result from a democratic
process should not be enjoined, the court erred. A-774 (noting that Section 905.1
was enacted “[a]fter extensive public hearings and legislative debates, wherein
Plaintiffs were provided a fair opportunity to present their positions”). “Provincial
interests and local political power are at their maximum weight” in bringing about
laws that primarily target out-of-state interests in order to promote in-state
interests. Am. Trucking Ass’ns v. Scheiner, 483 U.S. 266, 281 n.12 (1987) (quoting
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Nippert v. Richmond, 327 U.S. 416, 434 (1946)). The Commerce Clause is
designed to prevent state legislatures from promoting such parochial concerns at
the expense of national economic trade and policy. See Scheiner, 483 U.S. at 281
(“[T]his is the very kind of barrier the commerce clause was put in the fundamental
law to guard against.”) (quoting Nippert, 327 U.S. at 434). To the extent the
district court believed the political process justified its weighing of the balance of
harms and public interest, it was plainly mistaken.

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CONCLUSION
For the foregoing reasons, the Court should vacate the order of the district
court denying JJVCI’s motion for a preliminary injunction and remand with
instructions to enter a preliminary injunction in favor of JJVCI. Oral argument on
this appeal has been scheduled for August 27, 2015.
Respectfully submitted,

/s/ Jonathan F. Cohn
Jonathan F. Cohn
Ken Glazer
Kwaku A. Akowuah
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
(202) 736-8110
Kenneth B. Black
Timothy K. Conde
STOEL RIVES LLP
201 South Main Street, Suite 1100
Salt Lake City, Utah 84111
(801) 328-3131
Jerome A. Swindell
Assistant General Counsel
JOHNSON & JOHNSON
One Johnson & Johnson Plaza
New Brunswick, N.J. 08933
(732) 524-3965

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CERTIFICATE OF SERVICE
I certify that on June 26, 2015, I caused the foregoing Opening Brief of
Plaintiff-Appellant Johnson & Johnson Vision Care, Inc. to be served
electronically via CM/ECF on the following parties:
Parker Douglas
Utah Solicitor General
David Wolf
Assistant Attorney General
OFFICE OF THE UTAH ATTORNEY GENERAL
350 North State Street, Ste. 230
P.O. Box 142320
Salt Lake City, Utah 84114-2320
Email: [email protected]
Brent O. Hatch
Paul G. Cassell
Phillip J. Russell
HATCH, JAMES & DODGE, P.C.
10 West Broadway, Suite 400
Salt Lake City, Utah 84101
[email protected]
[email protected]
[email protected]
Garth T. Vincent
Gregroy M. Sergi
MUNGER, TOLLES & OLSON LLP
355 South Grand Avenue
Los Angeles, CA 90071
[email protected]
[email protected]

Mark M. Bettilyon
Brett L. Tolman
RAY QUINNEY & NEBEKER P.C.
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36 South State Street, Suite 1400
Salt Lake City, Utah 84111
[email protected]
[email protected]
David J. Burman
Shylah R. Alfonso
David S. Steele
PERKINS COIE LLP
1201 Third Avenue, Suite 4900
Seattle, Washington 98101-3099
[email protected]
[email protected]
[email protected]

/s/ Jonathan F. Cohn
Jonathan F. Cohn
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
Telephone: (202) 736-8110
Facsimile: (202) 736-8711

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CERTIFICATE OF RULE 32 COMPLIANCE
Pursuant to Fed. R. App. P. 32(a)(7)(C), I certify the following:
This brief complies with the type-volume limitation of Rule 32(a)(7)(B) of
the Federal Rules of Appellate Procedure because this brief contains 9,948 words,
excluding the parts of the brief exempted by Rule 32(a)(7)(B)(iii) of the Federal
Rules of Appellate Procedure and Circuit Rule 32(a)(1).
This brief complies with the typeface requirements of Rule 32(a)(5) of the
Federal Rules of Appellate Procedure and the type style requirements of Rule
32(a)(6) of the Federal Rules of Appellate Procedure because this brief has been
prepared in a proportionately spaced typeface using the 2007 version of Microsoft
Word in 14-point Times New Roman font.
/s/ Jonathan F. Cohn
Jonathan F. Cohn
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
Telephone: (202) 736-8110
Facsimile: (202) 736-8711

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CERTIFICATE OF ELECTRONIC SUBMISSION COMPLIANCE
Pursuant to this Court’s guidance on the use of the CM/ECF system, I
hereby certify that:
(1) all required privacy redactions have been made;
(2) the hard copies to be submitted to the court are exact copies of the
version submitted electronically;
(3) the ECF submission was scanned for viruses with the most recent
version of Symantec Endpoint Protection and, according to the program, is free of
viruses.
/s/ Jonathan F. Cohn
Jonathan F. Cohn
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
Telephone: (202) 736-8110
Facsimile: (202) 736-8711

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District Court Order Denying
Motion for Preliminary
Injunction

Case 2:15-cv-00252-DB Document 60 Filed 05/11/15 Page 1 of 19
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
ALCON LABORATORIES, INC.,
ORDER
Plaintiff,
Case No. 2:15cv252-DB
v.
District Judge Dee Benson
SEAN D. REYES, Attorney General of
Utah,
Defendant.
JOHNSON & JOHNSON VISION CARE,
Plaintiff,
Case No. 2:15cv257-CW
v.
District Judge Clark Waddoups
SEAN D. REYES, Attorney General of
Utah,
Defendant.

BAUSH & LOMB,
Plaintiff,
Case No. 2:15cv259-DAK
v.
District Judge Dale A. Kimball
SEAN D. REYES, Attorney General of
Utah,
Defendant.

This case is before the court on Plaintiffs Alcon Laboratories, Inc.’s (“Alcon”) (Dkt. No.
5), Johnson & Johnson Vision Care, Inc.’s (“JJVC”) (Dkt. No. 27), and Bausch & Lomb, Inc.’s
(“B&L”) (Dkt. No. 28) (collectively “Plaintiffs”) motions for preliminary injunction. Plaintiffs’

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consolidated motions ask this court to enjoin enforcement of recently enacted Utah Code Section
58-16a-905.1 (“section 905.1” or “the statute”) pending final adjudication of its constitutionality.
Plaintiffs assert that section 905.1 is an unconstitutional overreach of state legislative powers in
that it impermissibly interferes with the nationwide contact lens market in violation of the
Commerce Clause of the United States Constitution. Absent an injunction, section 905.1 is
scheduled to take effect on May 12, 2015.
The court heard argument on the Plaintiffs’ preliminary injunction motions on May 5,
2015. At the hearing, Plaintiff Alcon was represented by David R. Marriott, Jared Jenson, Amy
Sorenson and Amber Mettler. Plaintiff JJVC was represented by Jonathan F. Cohn, Kwaku
Akowuah and Tim Conde. Plaintiff B&L was represented by Clifford M. Sloan and Erik
Christiansen. Defendant Sean D. Reyes, in his official capacity as Attorney General of Utah
(“Utah”), was represented by Parker Douglas. Intervenor 1-800 CONTACTS, Inc. (“1-800")
was represented by Paul G. Cassell, Brent Hatch, Garth Vincent and Greg Sergi. Intervenor
Costco Wholesale Corporation (“Costco”) was represented by Shylah R. Alfonso and Mark
Bettilyon.
At the conclusion of the hearing the court took the matter under advisement. Since then,
the court has further considered the law and facts relating to the motions and the arguments
presented by counsel. Now, being fully advised, the court issues the following Memorandum
Decision and Order.
BACKGROUND
The contact lens industry in the United States is roughly a $4 billion dollar-per-year
industry. (Alcon Mem. in Supp. at 5.) It is controlled by four primary contact lens

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manufacturers – Alcon, JJVC, B&L, and CooperVision, Inc. (collectively the “Manufacturers”) –
who maintain an almost 100% market share of the industry. (Costco Opp’n at viii.) None of the
four manufacturers are located in Utah.
The contact lens industry has two features that make it particularly susceptible to
anticompetitive conduct. First, contact lenses may be sold only pursuant to a valid prescription
from an eye care professional (“ECP”), and each prescription from the ECP is brand and model
specific. Except in limited circumstances, neither the consumer nor a contact lens retailer has the
power to substitute an alternative or cheaper option to the prescribed brand, such as a generic
equivalent. Second, “[u]nlike medical doctors who are prohibited from selling the drugs they
prescribe, [ECPs] . . . are able to fill the contact lens prescriptions they write.” (1-800 Opp’n at
2-3.) In other words, an ECP is both a contact lens prescriber and a contact lens retailer. H.R.
Rep. No. 108-318, at 5 (Fairness to Contact Lens Consumers Act) (Oct. 15, 2003). “In almost no
other medical context does the prescriber of a medical device have the power to control both the
brand the patient must use and also sell the particular medical device in the same breath.”
(Costco Opp’n at ix.)
Once prescribed, however, contact lenses may be purchased from either the prescribing
ECP or from eye care retailers (e.g., LensCrafters), mass merchandise retailers (e.g., Costco,
Wal-Mart), internet retailers (e.g., 1-800 Contacts), pharmacies, or any other person who sells
the prescribed lenses.1 However, because non-ECP retailers are unable to compete with ECPs by
providing a different brand of contact lens than prescribed (such as a generic equivalent), the

1

Under Federal law, the ECP is required to give the patient her prescription so the patient can purchase the contact
lenses from the retailer of her choice based on price and convenience, among other factors. 15 U.S.C. § 7601(a); 16
C.F.R. § 315.3.

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non-ECP retailer’s only means of competing with an ECP retailer is to offer lower prices on the
same brands and types of lenses.
Non-ECP retailers, such as Intervenors 1-800 and Costco, assert that because ECPs are
the only contact lens retailers that are dual-positioned to both prescribe and sell contact lenses to
consumers, ECPs can “leverage their control over prescriptions and brand selection to also
control and monopolize contact lens sales.” (Costco Opp’n at x.) The non-ECP retailers further
assert that because of this control over the market, contact lens manufacturers have a strong
interest in “incentivizing ECPs to prescribe their brands by assisting in various methods of
shielding ECPs from retail competition by discounters.” (1-800 Opp’n at 3.)
Conversely, the Manufacturers claim that they, alone, are burdened with the task of
educating ECPs about innovative products and developments in the industry so that the ECPs can
pass that information along to their patients. Accordingly, to foster good relationships with the
ECPs, the Manufacturers have invested in programs that are extended only to ECPs and retailers
associated with ECPs. These programs include but are not limited to manufacturer rebates, free
trial lenses for ECPs, and launching new products exclusively with ECPs. (See Alcon Mem. in
Supp. at 7.) According to the Manufacturers, these programs “improve patient access to better
information and new technologies, and enhance access to better eye care.” (Id.)
Prior Legislation and Litigation
Given the unique features of the contact lens business, the industry has a significant
history of litigation and legislation. For example, in the 1990s, attorneys general from 32 states
(including Utah) and a national class of consumers brought actions against the American
Optometric Association and the contact lens manufacturers for conspiring with ECPs and others

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to restrain competition with “alternative retailers” such as online companies, pharmacies and big
box retailers. See In re Disposable Contact Lens Antitrust Litig., MDL No. 1030, 2001 WL
493244 (M.D. Fla Feb. 1, 2001). In 2001 – after nearly seven years of litigation – MDL 1030
culminated in a settlement, with the contact lens manufacturers paying a substantial cash
settlement to consumers and agreeing to broad injunctive relief requiring the Manufacturers to
sell contact lenses to non-ECP retailers in a “commercially reasonable” and “nondiscriminatory” manner for at least five years. (See 1-800 Opp’n at 4.) After the injunctive
provisions of the consent decree expired, the Utah Legislature, in 2006, essentially codified the
“anti-discrimination” provisions of the MDL through the enactment of Utah Code Section 5816a-904. See Utah Code Ann. § 58-16a-904 (providing “a manufacturer of contact lenses doing
business in the state” shall certify contact lenses to be “made available in a commercially
reasonable and nondiscriminatory manner”).
The business practices of the contact lens industry have also yielded federal legislation.
In 2003, in response to allegations that the Manufacturers and ECPs were impeding consumers’
ability to purchase contact lenses from discounters by (1) preventing consumers from obtaining
copies of their prescriptions to purchase lenses elsewhere, and (2) erecting obstacles to non-ECP
retailers’ attempts to verify prescriptions, Congress enacted the Fairness to Contact Lens
Consumers Act (“FCLCA”).2 The FCLCA requires that a contact lens prescriber, “whether or
not requested by the patient, shall provide to the patient a copy of the contact lens prescription,”
and establishes a prescription verification process allowing retailers to sell lenses if the ECP does
not respond to a verification request within a certain time period. 15 U.S.C. §§ 7601 & 7603.
2

See H.R. Rep. No. 108-318, at 4; Pub. L. 108-164, Fairness to Contact Lens Consumer Act (2003), codified at 15
U.S.C. § 7601 et seq.

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Manufacturer Uniform Pricing Policies (“UPPs”)
Approximately two years ago, the Manufacturers began implementing unilateral resale
pricing policies (“UPPs”). 3 These UPPs set a minimum retail price below which retailers may
not sell certain contact lenses to consumers. If a retailer thereafter sells or prices that particular
contact lens below the manufacturer’s UPP, the manufacturer punishes the retailer by
terminating supply of contact lenses for one year.
The Manufacturers claim that the UPPs benefit everyone by “allow[ing] [ECPs] to
refocus the critical doctor/patient conversation on eye health and product performance, rather
than cost.” (Angelini Letter). According to Alcon, the Manufacturers face the challenge of
“educating ECPs, who alone are authorized to write prescriptions, about the attributes of the
products, and of encouraging them, in turn, to inform patients of their potential benefits.” (Alcon
Mem. in Supp. at 7.) Alcon suggests that “ECPs may be reluctant to undertake these efforts if,
once the patient receives a prescription, it may be filled by a low-cost contact lens reseller whose
business model does not include those investments and who ‘free rides’ on the professional
services the ECPs provide.” (Id.) Additionally, the Manufacturers claim the UPPs are beneficial
because they “eliminate[] the need for discussions with eye doctors about other retailers’ prices.
Consumers are assured that if their [ECP] or any other retailer is charging the minimum price,
there is no need to shop around for a better bargain.” (JJVC Mem. in Supp. at 4.)
Non-ECP retailers, such as Intervenors Costco and 1-800, contend that the practical and
intended effect of the UPPs is to divert sales from more efficient, lower-cost retailers. (Costco
Opp’n at xiv.) They claim that by restricting retail price competition, consumers now have fewer
3

The State of Utah and the Intervenors refer to the Plaintiffs’ UPPs as minimum resale price maintenance (“RPM”)
policies.

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product choices and must pay higher prices, resulting in less competition and higher margins for
ECPs. (Costco Opp’n at xv.) They claim that the Manufacturers’ justifications for implementing
the UPPs are pretextual given that the UPPs do not require or even encourage ECPs to invest in
tangible or intangible services or promotional efforts that might improve patient care. (Costco
Opp’n at xvi.)
Since implementation, the Manufacturers’ UPPs have generated scrutiny. On July 30,
2014, the U.S. Senate Committee on the Judiciary, Subcommittee for Antitrust, Competition
Policy and Consumer Rights held a hearing to examine the use of resale price maintenance
programs (or UPPs) in the contact lens industry. The Committee noted their intent to revisit the
issue once further evidence develops showing the impact of such policies on competition and
consumer pricing. (1-800's Opp’n at 8 (providing citation to Senate’s website for video
recording of Senate hearing).) Additionally, in recent months roughly 40 consumer class action
complaints have been filed, across the United States, against the Manufacturers, alleging
violations of federal and/or state antitrust laws by engaging in an unlawful conspiracy to fix
contact lens prices.4
Section 905.1
On March 10, 2015, the Utah Legislature amended the Contact Lens Consumer
Protection Act through the addition of section 58-16a-905.1. In doing so, Utah became the first
state to enact legislation attempting to restrict UPPs for contact lenses. Similar legislation has
been proposed in Mississippi, Washington, Arizona, Florida, New York, Idaho, Oregon, Illinois
and California. (Costco Opp’n at xviii.)
4

There are motions pending to coordinate or consolidate the actions into a multidistrict litigation forum. In re
Disposable Contact Lens Antitrust Litigation, MDL No. 2626 (2015).

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Section 905.1 of the Contact Lens Consumer Protection Act provides as follows:
A contact lens manufacturer or a contact lens distributor may not:
(1) take any action, by agreement, unilaterally, or otherwise, that has the effect of fixing
or otherwise controlling the price that a contact lens retailer charges or advertises for
contact lenses; or
(2) discriminate against a contact lens retailer based on whether the contact lens retailer:
(a) sells or advertises contact lenses for a particular price;
(b) operates in a particular channel of trade;
(c) is a person authorized by law to prescribe contact lenses; or
(d) is associated with a person authorized by law to prescribe contact lenses.
Utah Code Ann. Section 58-16a-905.1.
The Utah Legislature also amended section 58-16a-906, to provide that “the attorney
general may bring a civil action or seek an injunction and a civil penalty” against any person
“who violates section 58-16a-905.1.” Id. Before approving section 905.1, the Utah Legislature
held hearings with views presented from the various conflicting interests, including Alcon and
JJVC, various Utah retailers, the Utah Real Merchants Association, the Utah Manufacturers
Association, and the Utah Optometric Association.
The Present Lawsuit
On April 13, 2015, Alcon initiated a declaratory judgment action seeking to have section
905.1 declared unconstitutional. Alcon accompanied the filing of its declaratory judgment action
with the instant motion for preliminary injunctive relief. (Dkt. Nos. 2 & 5, respectively.) The
next day, JJVC and B&L filed similar lawsuits and requests for injunctive relief. On April 21,
2015, the three separate actions were consolidated. (Dkt. No. 26.)
The State of Utah and Intervenors 1-800 and Costco assert that section 905.1 – which
they perceive as simply prohibiting Plaintiffs from fixing the retail price of contact lenses in
Utah – merely restores fair competition and will result in lower contact lens prices for

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consumers. They claim section 905.1 is akin to countless state statutes “enacted pursuant to the
traditional powers in the area of antitrust and unfair competition to regulate conduct that directly
affects in-state consumers and business.” (1-800 Opp’n at 2.)
The Manufacturers assert that section 905.1 violates the Commerce Clause of the United
States Constitution because it impermissibly interferes with commercial conduct outside of Utah,
discriminates against interstate commerce, and imposes an excessive burden on interstate
commerce. (Alcon’s Mem. in Supp. at 13-20.) They claim section 905.1 will have the effect of
removing Utah-based retailers, and only Utah-based retailers, from the scope of national policies
like the UPP, allowing in-state retailers to sell at lower prices than out-of-state retailers who try
to serve Utah customers. (See Alcon’s Mem. in Supp. at 3.) The Manufacturers assert that
section 905.1 is unconstitutional and the injuries they will suffer when section 905.1 goes into
effect will be irreparable. Accordingly, the Manufacturers assert they are entitled to a
preliminary injunction, to have effect only for so long as is necessary for this court to issue a
final judgment.
DISCUSSION
“[A] preliminary injunction is an extraordinary remedy; it is the exception rather than the
rule.” General Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1226 (10th Cir. 2007)
(internal quotation marks omitted). The movant must show: “(1) a substantial likelihood of
success on the merits; (2) irreparable harm to the movant if the injunction is denied; (3) [that] the
threatened injury outweighs the harm that the preliminary injunction may cause the opposing
party; and (4) [that] the injunction, if issued, will not adversely affect the public interest.” Id.
“The party seeking the preliminary injunction must show that the . . . factors weigh heavily and

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compellingly in its favor” and “[t]he right to relief in a preliminary injunction must be clear and
unequivocal.” VR Acquisitions LLC v. Wasatch County, 2015 WL 417895, at *7 (D. Utah Jan.
30, 2015) (internal quotation marks omitted). In the context of a request for a preliminary
injunction against enforcement of a state law, enacted in the public interest, these alreadydemanding standards are applied rigorously. See Heideman v. South Salt Lake City, 348 F.3d
1182, 1189 (10th Cir. 2003).
1. Likelihood of Success on the Merits
Plaintiffs have failed to convince the court that they are likely to succeed on the merits of
this case. Plaintiffs argue that section 905.1 clearly violates the Commerce Clause, which grants
Congress the exclusive power to regulate interstate commerce. (Alcon Reply at 6.) Specifically,
Plaintiffs assert that the statute has impermissible extraterritorial effects, impermissibly
discriminates against out-of-state economic interests, and imposes excessive burdens on
interstate commerce. (Id.)
Extraterritorial Effects
The court is not persuaded that Plaintiffs are likely to succeed in demonstrating that
section 905.1 has impermissible extraterritorial effects. The United States Supreme Court
summarized what constitutes impermissible extraterritorial effects in Healy v. Beer Inst., 491
U.S. 324, 336 (1989): “[T]he ‘Commerce Clause . . . precludes the application of a state statute
to commerce that takes place wholly outside of the State’s borders, whether or not the commerce
has effects within the State.’” Id. (quoting Edgar v. MITE Corp., 457 U.S. 624, 642-43 (1982)).
Any assertion that section 905.1 would impose such effects is circumvented by the Utah
Supreme Court’s recent explanation that, “[u]nder a deeply rooted and longstanding canon of

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construction, statutes are presumed not to have extraterritorial effect. This presumption is a
gapfiller, operating under a ‘clear statement’ rule. It provides that unless a statute gives a ‘clear
indication of an extraterritorial application, it has none.’” Nevares v. M.L.S., 345 P.3d 719, 727
(Utah 2015) (quoting Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 262-65 (2010)) (internal
citation omitted). The court sees no clear indication of an extraterritorial application in the
statute at issue here and, thus, no such application can be assumed at this point in the case.
Discrimination
Similarly, the court is not persuaded that Plaintiffs are likely to succeed in demonstrating
that section 905.1 inappropriately discriminates against out-of-state economic interests. The
United States Supreme Court has stated that state laws are discriminatory and “violate the
Commerce Clause if they mandate ‘differential treatment of in-state and out-of-state economic
interests that benefits the former and burdens the latter.’” Granholm v. Heald, 544 U.S. 460, 472
(2005) (quoting Oregon Waste Systems, Inc. v. Department of Environmental Quality of Ore.,
511 U.S. 93, 99 (1994); see also New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 273
(1988) (“This ‘negative’ aspect of the Commerce Clause prohibits economic protectionism – that
is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state
competitors.”) However, “[n]ot every benefit or burden will suffice – only one that ‘alters the
competitive balance between in-state and out-of-state firms.’” Kleinsmith v. Shurtleff, 571 F.3d
1033, 1041 (10th Cir. 2009).
Plaintiffs concede that “read literally, [section 905.1] applies to manufacturers and
distributors both within and outside Utah . . . .” (Alcon Mem. in Supp. at 19.) See Ass’n des
Eleveurs de Canards et d’Oies du Quebec v. Harris, 729 F.3d 937, 948 (9th Cir. 2013), cert.

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denied, 135 S. Ct. 398 (2014) (“A statute that ‘treats all private companies exactly the same’
does not discriminate against interstate commerce. . . . This is so even when only out-of-state
businesses are burdened because there are no comparable in-state businesses.”) (citing United
Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 342 (2007);
Exxon Corp. v. Gov. of Maryland, 437 U.S. 117, 119, 125)). Plaintiffs argue instead that the
statute is discriminatory because it “protects ‘a [Utah] contact lens retailer,’ but not a non-Utah
contact lens retailer, from manufacturer pricing policies . . . [and] entitles ‘a [Utah] contact lens
retailer,’ but not a non-Utah contact lens retailer, to manufacturer programs that are designed for
some kinds of retailers and not others.” (Alcon Reply at 10.)
However, the record before the court supports Defendants’ claim that “the fact that retail
sales outside of Utah could be higher because of the [UPPs] is entirely the result of Plaintiffs’
pricing policies—not any action taken by Utah.” (Costco Opp’n at 14.) Indeed, the purported
burden that out-of-state retailers face as a result of the statute is simply that they may continue to
be subject to UPPs and other policies implemented by contact lens manufacturers, whereas instate retailers will not. Section 905.1 in no way requires or anticipates that out-of-state retailers
will continue to be subject to UPPs. Instead, the statute merely protects Utah retailers and
consumers from activity that the State of Utah believes violates principles of fair competition.
Antitrust law “is an area traditionally regulated by the States.” California v. ARC
America Corp., 490 U.S. 93, 101 (1989). “Congress intended the federal antitrust laws to
supplement, not displace, state antitrust remedies.” Id. at 102. As such, federal antitrust law sets
a floor below which states cannot go, but states are free to legislate and regulate certain
transactions more aggressively. See, e.g., Exxon Corp. v. Gov. of Maryland, 437 U.S. 117, 129-

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32 (1978). The statute at issue here is nothing more than a state antitrust statute, tailored to a
specific industry, which the state has the power to enact. Id. at 133-34.
In Exxon, the Maryland legislature—in response to evidence that oil producers and
refiners were favoring company-operated gasoline stations during the 1973 petroleum shortage—
enacted a statute prohibiting petroleum producers and refiners from operating retail service
stations within the State of Maryland and requiring that all temporary price reductions be
extended uniformly to all service stations supplied within the state. Id. at 117. The plaintiffs in
Exxon argued, similarly to Plaintiffs in the present case, that the Maryland statute discriminated
against interstate commerce, unduly burdened interstate commerce, and imposed “controls on a
commercial activity of such an essentially interstate character that it [was] not amenable to state
regulation.” Id. at 125. The United States Supreme Court rejected all three arguments, holding
that the statute did not violate the Commerce Clause. Id. at 125-29. The Court noted that the
Commerce Clause does not “protec[t] the particular structure or methods of operation in a retail
market” nor does it invalidate a duly enacted state statute simply because the statute “causes
some business to shift from one interstate supplier to another.” Id. at 127. As in Exxon, the
statute at issue here attempts to remedy a significant market issue—retail price fixing by contact
lens manufacturers.
Based on the record before the court, section 905.1 appears to be no more restrictive than
the statute upheld in Exxon. In Exxon, the statute required producers to provide uniform
discounts to all service stations. Here, the statute merely requires that manufacturers refrain
from mandating price fixing within the state of Utah and from discriminating against Utah
retailers for reasons related to price fixing. This Utah statute, like the statute in Exxon, appears

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to be an appropriately tailored antitrust statute within the legislative authority of the state. See
ARC America Corp., 490 U.S. at 101-02; see also Knevelbaard Dairies v. Kraft Foods, Inc., 232
F.3d 979, 993-94 (9th Cir. 2000) (holding that “California may apply its antitrust and unfair
competition statutes consistent with the Commerce Clause” to a price fixing scheme in
Wisconsin that affected prices in California).
Plaintiffs argue that the legislation at issue here is unique because “unlike traditional state
antitrust, consumer protection, and public safety laws, . . . [the statute] forces out-of-state
manufacturers and distributors who want to withdraw from commerce with a state resident…to
continue engaging in interstate commerce with them.” (Alcon Reply at 7.) Plaintiffs assert that
Section 2 of the statute, which prohibits “discrimination” against retailers, essentially “instructs
the Attorney General to penalize a manufacturer for deciding not to ship contact lenses to Utah . .
. .” (Id.) At this early stage of the proceedings, a pre-enforcement request for preliminary
injunction, Plaintiffs’ constitutional concerns are premature and speculative.
First, a Utah statute that has been in effect since 2006 already expressly penalizes contact
lens manufacturers that fail to make contact lenses available to retailers in a nondiscriminatory
and commercially reasonable manner. Utah Code Ann. § 58-16a-904. Plaintiffs have
presumably complied with this statute since 2006, and nothing in the record before this court
indicates that the statute has been enforced in a way that impermissibly compels or effects
interstate commerce.
Second, because section 905.1 has not yet taken effect, the Utah Attorney General’s
Office has not had the opportunity to offer its interpretation of the statute in connection with an
actual enforcement action. At oral argument, the Attorney General’s representative expressed

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some uncertainty as to how and to what extent the law will be enforced. At this early stage, the
court presumes the Utah Attorney General will enforce the statute in a manner that does not
violate the Commerce Clause. See, e.g., Nevares v. M.L.S., 345 P.3d 719, 727 (Utah 2015)
(providing that duly enacted state statutes are presumed to be constitutional). At this stage, the
court does not find that Plaintiffs have established that this statute is significantly different from
other state antitrust statutes that have been upheld.
Burden on Interstate Commerce
The court is also unpersuaded that Plaintiffs are likely to succeed in demonstrating that
the burden imposed on interstate commerce by the statute is clearly excessive in relation to the
putative local benefits. Even if a state statute does not improperly discriminate or have
impermissible extraterritorial effects, it will violate the Commerce Clause if it imposes a burden
on interstate commerce that is “clearly excessive in relation to the putative local benefits.” Pike
v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). This inquiry requires the court to consider “(1)
the nature of the putative local benefits advanced by the Ordinance; (2) the burden the Ordinance
imposes on interstate commerce; (3) whether the burden is “clearly excessive in relation to” the
local benefits; and (4) whether the local interests can be promoted as well with a lesser impact on
interstate commerce.” Blue Circle Cement, Inc. v. Bd. of Cnty Comm’rs, 27 F.3d 1499, 1512
(10th Cir. 1994).
The putative local benefit is that section 905.1 “would return intrabrand competition to
the Utah contact lens marketplace, allowing Utah contact lens retailers to provide lower prices to
Utah consumers.” (Costco Opp’n at 13.) As discussed above, this is exactly the type of benefit
states are permitted to advance through state antitrust laws.

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The purported burden on interstate commerce is that out-of-state manufacturers would
have to “participate in interstate commerce, under circumstances which they otherwise would
choose not to . . .” and that retailers in Utah, but not retailers in the other 49 States, would be
exempt from certain manufacturer policies. (Alcon Reply at 13-14.) This purported burden
appears to be no greater than the burden imposed by any other state antitrust law. Indeed, as
with apparent competitive advantages that may be gained by in-state businesses through other
state antitrust laws, any competitive advantages obtained by Utah contact lens retailers through
this statute will be negated if other states enact similar antitrust laws of their own. As noted
above, such legislation is presently under consideration in at least 9 states. Consequently,
Plaintiffs are not likely to demonstrate that the burden on interstate commerce imposed by the
statute is “clearly excessive in relation to” the local benefits.
2. Irreparable Harm if the Injunction is Denied
Similarly, Plaintiffs have failed to convince the court that they will suffer irreparable
harm if the injunction is denied. Establishing irreparable harm is not an “easy burden to fulfill.”
Greater Yellowstone Coalition v. Flowers, 321 F.3d 1250, 1258 (10th Cir. 2003). “To constitute
irreparable harm, an injury must be certain, great, actual and not theoretical.” Heideman v.
South Salt Lake City, 348 F.3d 1182, 1189 (10th Cir. 2003).
Plaintiffs claim they will suffer two primary forms of irreparable harm absent an
injunction—constitutional injury and economic injury. (Alcon Mem. in Supp. at 22.) Plaintiffs’
claimed constitutional injury is the “[d]eprivation of the rights guaranteed under the Commerce
Clause[.]” Am. Civil Liberties Union v. Johnson, 194 F.3d 1149, 1163 (10th Cir. 1999). As
discussed in detail above, these constitutional injuries are speculative at this stage and, as such,

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Plaintiffs have failed to establish injuries that are certain, actual and imminent, as required for a
preliminary injunction. See Heideman, 348 F.3d at 1189 (“[T]he party seeking injunctive relief
must show that the injury complained of is of such imminence that there is a clear and present
need for equitable relief to prevent irreparable harm.”).
Plaintiffs’ claimed economic injuries include “financial loss that cannot be recovered
because of the state’s sovereign immunity from suits for damages” and the possibility that the
Plaintiffs’ inability to enforce UPPs will “suppress [Plaintiffs’] incentives and ability to invest in
research and development.” (Alcon Mem. in Supp. at 23.) These injuries, like Plaintiffs’
claimed constitutional injuries, rely on Plaintiffs’ speculation, both as to the monetary amounts
of such injuries, and how section 905.1 will be enforced. Such hypothetical injuries are
insufficient to constitute irreparable harm. See Goldammer v. Fay, 326 F.2d 268, 270 (10th Cir.
1964) (“Injunction is a drastic remedy to be exercised with caution, and should be granted only is
cases where the necessity therefore is clearly established.”); Voile Mfg. Corp. v. Dandurand, 551
F. Supp. 2d 1301, 1307 (D. Utah 2008) (holding that a “probable loss in market share” was not
the type of damage that amounts to irreparable harm). Accordingly, the court concludes that
Plaintiffs have failed to meet their burden of establishing irreparable harm.
3. The Balance of Hardships & Public Interest
Finally, the balance of hardships and public interest factors also weigh against granting a
preliminary injunction in this case. Utah’s ability “to enact and enforce measures it deems to be
in the public interest is [] an equity to be considered in the balance of hardships.” Heideman,
348 F.3d at 1191. Entering an injunction in this case would prevent enforcement of a law that
the Utah Legislature determined was necessary to protect consumers and promote free

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competition in the retail market for contact lenses. Indeed, according to Costco, the UPPs have
forced Costco “to raise contact lens prices by as much as 35%, while undermining Costco
Wholesale’s business model, reducing product choice, foreclosing retail competition, and
damaging its goodwill.” (Costco Opp’n at 16.) In contrast, as the court has previously
explained, any alleged harm to Plaintiffs is speculative.
Similarly, although Plaintiffs appeal to the public interest of upholding the Constitution
as a basis for granting the preliminary injunction, as explained by the court more fully above,
Plaintiffs have failed to persuade the court that they are likely to succeed on their claim that
section 905.1 is, in fact, unconstitutional.
Section 905.1 was enacted by the elected representatives of the people of Utah after a
determination that it was in their best interest. See Utah Gospel Mission v. Salt Lake City Corp.,
316 F. Supp. 2d 1201, 1223 (D. Utah 2004), aff’d, 425 F.3d 1249 (10th Cir. 2005) (denying
motion for preliminary injunction and finding public interest would be impaired because it would
“undermine the public process by nullifying the decision . . . [by] elected officials. The
[democratic] process . . . was extensive, time consuming, very public and often wrenching and
divisive. A compromise was reached through democratic means, and it would not be in the
public interest to set this process aside.”). After extensive public hearings and legislative
debates, wherein Plaintiffs were provided a fair opportunity to present their positions, the people
of Utah chose to enact section 905.1 to eliminate price fixing in favor of free competition.
For these reasons, Plaintiffs have failed to satisfy the court that enjoining section 905.1
would be in the best interests of the public.

18

Case 2:15-cv-00252-DB Document 60 Filed 05/11/15 Page 19 of 19
Appellate Case: 15-4073 Document: 01019451233 Date Filed: 06/26/2015 Page: 77

CONCLUSION
Based on the foregoing, Plaintiffs’ consolidated motions for preliminary injunction are
DENIED. Plaintiffs have failed to satisfy the court that they have met the requirements for a
preliminary injunction. Specifically and significantly, the court is not persuaded at this stage in
the litigation that the Plaintiffs are likely to succeed on the merits.
Dated this 11th day of May, 2015.

___________________________________
Dee V. Benson
United States District Court Judge

19

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