Case No. F IN THE COURT OF APPEAL OF CALIFORNIA FIFTH APPELLATE DISTRICT

Transcription

1 Case No. F IN THE COURT OF APPEAL OF CALIFORNIA FIFTH APPELLATE DISTRICT MONSANTO COMPANY, Plaintiff and Appellant, and CALIFORNIA CITRUS MUTUAL et al., Plaintiff-Intervenors and Appellants, v. OFFICE OF ENVIRONMENTAL HEALTH HAZARD ASSESSMENT et al., Defendants and Respondents, and SIERRA CLUB, et al., Defendant-Intervenors and Respondents. APPELLANT S OPENING BRIEF Arising From the Superior Court for the State of California, County of Fresno, Case No. 16CECG00183 Hon. Kristi Culver Kapetan, Judge, Dept. 403 (Telephone: ) ARNOLD & PORTER KAYE SCHOLER LLP Trenton H. Norris (SBN ) Sarah Esmaili (SBN ) S. Zachary Fayne (SBN ) Three Embarcadero Center, 10th Floor San Francisco, California Telephone:(415) Facsimile: (415) Trenton.Norris@apks.com Attorneys for Appellant Monsanto Company

2 CERTIFICATE OF INTERESTED ENTITIES OR PERSONS Pursuant to California Rule of Court 8.208, the undersigned, counsel of record for Petitioner Monsanto Company ( Monsanto ), certifies that: 1. Monsanto is publicly traded. Monsanto is not aware of any other person or entity that has a 10% or more ownership interest in Monsanto. 2. Monsanto is aware of two other entities that may have a financial or other interest in the outcome of the proceedings that Monsanto believes, out of an abundance of caution, the justices should consider in determining whether to disqualify themselves. a. Bayer AG: on September 14, 2016, Monsanto and Bayer Aktiengesellschaft signed an agreement and plan of merger that provides, subject to the terms and conditions therein, that Monsanto will merge with and into Bayer AG. The transaction is expected to close by the end of Bayer AG is a publicly traded company. b. The Scotts Company LLC ( Scotts ): Scotts is Monsanto s exclusive agent for sales and distribution of Roundup Lawn and Garden products. Scotts is a wholly-owned subsidiary of The Scotts Miracle-Gro Company, which is a publicly traded company. These representations are made to enable the Court to evaluate possible disqualification or recusal. Dated: July 21, 2017 /s/ Trenton H. Norris Trenton H. Norris 2

3 TABLE OF CONTENTS Page I. INTRODUCTION... 9 II. STATUTORY AND REGULATORY BACKGROUND A. Proposition 65 and the Labor Code Listing Mechanism B. Evolution of the Labor Code Listing Mechanism III. FACTUAL BACKGROUND A. Glyphosate Is A Widely Used and Effective Herbicide B. OEHHA and Every Other Governmental Body That Has Assessed Glyphosate Has Determined That Glyphosate Does Not Cause Cancer in Humans C. Contrary to OEHHA s Prior Determination and Every Other Governmental Assessment of Glyphosate, IARC Determined that Glyphosate Is a Probable Carcinogen D. Based Solely on the IARC Working Group s Decision, OEHHA Listed Glyphosate as a Carcinogen E. The Trial Court Dismisses Monsanto s Action at the Pleading Stage, and Monsanto Appeals IV. STANDARD OF REVIEW V. ARGUMENT A. THE LABOR CODE MECHANISM VIOLATES ARTICLE II, SECTION 12 OF THE CALIFORNIA CONSTITUTION The Labor Code Mechanism Confers a Power on IARC IARC and Its Working Groups Are Private IARC Is a Corporation

4 B. THE LABOR CODE LISTING MECHANISM CONSTITUTES AN UNCONSTITUTIONAL DELEGATION OF RULEMAKING AUTHORITY TO IARC The Trial Court Erroneously Disregarded Binding Precedent That Prohibits Delegations of Rulemaking Authority to Non-Governmental Entities Like IARC The Trial Court Erred In Relying on Kugler to Conclude That the Labor Code Listing Mechanism Did Not Delegate Any Authority to IARC The Delegation of Rulemaking Authority to IARC Is Unconstitutional Under the Two- Pronged Carson Test The Trial Court Abused Its Discretion In Denying Monsanto Leave to Amend C. THE LISTING OF GLYPHOSATE PURSUANT TO THE LABOR CODE LISTING MECHANISM IS SUBJECT TO AND VIOLATES PROCEDURAL DUE PROCESS Labor Code Listing Determinations Are Subject to Procedural Due Process The Labor Code Listing of Glyphosate Violates Monsanto s Right to Procedural Due Process D. THE LABOR CODE MECHANISM VIOLATES THE GUARANTEE CLAUSE OF THE U.S. CONSTITUTION E. MONSANTO S FREE SPEECH CLAIMS ARE RIPE VI. CONCLUSION CERTIFICATE OF COMPLIANCE

5 TABLE OF AUTHORITIES CASES PAGE(S) AFL-CIO v. Deukmejian, 212 Cal. App. 3d 425 (1989) Agua Caliente Band of Cahuilla Indians v. Superior Court, 40 Cal. 4th 239 (2006) All. Mortgage Co. v. Rothwell, 10 Cal. 4th 1226 (1995) Am. Meat Institute v. Leeman, 180 Cal. App. 4th 728 (2009)... 56, 57 Baxter Healthcare Corp. v. Denton, 120 Cal. App. 4th 333 (2004) Beck Dev. Co. v. S. Pac. Transp. Co., 44 Cal. App. 4th 1160 (1996) Cal. Chamber of Commerce v. Brown, 196 Cal. App. 4th 233 (2011) Cal. Gillnetters Ass n v. Dep t of Fish & Game, 39 Cal. App. 4th 1145 (1995)... 49, 50 Calfarm Ins. Co. v. Deukmejian, 48 Cal. 3d 805 (1989)...15, 23, 26, 27 Carson Mobilehome Park Owners Ass n v. City of Carson, 35 Cal. 3d 184 (1983)... 38, 39, 40 City of Costa Mesa v. Connell, 74 Cal. App. 4th 188 (1999) Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666 (1999)... 51, 52 Consumer Cause, Inc. v. SmileCare, 91 Cal. App. 4th 454 (2001) Dowhal v. SmithKline Beecham Consumer Healthcare, 32 Cal. 4th 910 (2004) E.W. Bliss Co. v. Superior Ct., 210 Cal. App. 3d 1254 (1989)

6 Exxon Mobil Corp. v. OEHHA, 169 Cal. App. 4th 1264 (2009)... 31, 34 Fireman s Fund Ins. Co. v. Maryland Cas. Co., 65 Cal. App. 4th 1279 (1998) Horn v. Cty. of Ventura, 24 Cal. 3d 605 (1979)... 49, 50 Int l Ass n of Plumbing & Mech. Officials v. Cal. Bldg. Standards Comm n, 55 Cal. App. 4th 245 (1997)...passim Jackson Court Condos., Inc. v. City of New Orleans, 874 F.2d 1070 (5th Cir. 1989) Kapsimallis v. Allstate Ins. Co., 104 Cal. App. 4th 667 (2002) Kugler v. Yocum, 69 Cal. 2d 371 (1968)...passim Legislature v. Deukmejian, 34 Cal. 3d 658 (1983) Light v. State Water Res. Control Bd., 226 Cal. App. 4th 1463 (2014) Long Beach Equities, Inc. v. Cty. of Ventura, 231 Cal. App. 3d 1016 (1991) Metro. Water District v. Whitsett, 215 Cal. 400 (1932)... 33, 37 Morrissey v. State, 951 P.2d 911 (Colo. 1998) NRDC v. EPA, 464 F.3d 1 (D.C. Cir. 2006) Pac. States Tel. & Tel. Co. v. Oregon, 223 U.S. 118 (1912) Plastic Pipe & Fittings Ass n v. Cal. Bldg. Standards Comm n, 124 Cal. App. 4th 1390 (2004)...passim Reynolds v. Sims, 377 U.S. 533 (1964)

7 Roman v. Cty. of Los Angeles, 85 Cal. App. 4th 316 (2000)... 20, 21, 44 Ryan v. Cal. Interscholastic Fed n-san Diego Section, 94 Cal. App. 4th 1048 (2001) Sanctity of Human Life Network v. Cal. Highway Patrol, 105 Cal. App. 4th 858 (2003) Smith v. Cty. of Kern, 20 Cal. App. 4th 1826 (1993) Soranno s Gasco, Inc. v. Morgan, 874 F.2d 1310 (9th Cir. 1989) State v. Wakeen, 57 N.W.2d 364 (Wis. 1953) Stearn v. Cty. of San Bernardino, 170 Cal. App. 4th 434 (2009) Tain v. State Bd. of Chiropractic Exam rs, 130 Cal. App. 4th 609 (2005) VanSickle v. Shanahan, 511 P.2d 223 (Kan. 1973) W. Oil & Gas v. Air Res. Bd., 37 Cal. 3d 502 (1984) Westoil Terminals Co. v. Harbor Ins. Co., 73 Cal. App. 4th 634 (1999) Wilkinson v. Madera Cmty. Hosp., 144 Cal. App. 3d 436 (1983) WMX Techs., Inc. v. Miller, 197 F.3d 367 (9th Cir. 1999) CONSTITUTIONAL PROVISIONS U.S. Const. art. IV, amend. I Cal. Const. art. I, art. II, 12...passim 7

8 STATUTES AND REGULATIONS Civ. Code Health & Safety Code , , , 13, 14, , 56 Lab. Code (b)(1) (d) Veh. Code Cal. Code Regs (b)...passim 25904(c)... 13, , 24 OTHER AUTHORITIES The Federalist Nos. 10, 39 (James Madison) Hans A. Linde, When Initiative Lawmaking Is Not Republican Government : The Campaign Against Homosexuality, 72 Or. L. Rev. 19, 20 (1993)

9 I. INTRODUCTION Respondent Office of Environmental Health Hazard Assessment ( OEHHA ) has designated as a carcinogen the most widely used herbicide in California, even though OEHHA (and every other regulatory body to review the chemical) has judged [the chemical] unlikely to pose a cancer hazard to humans. OEHHA made this designation based on a fundamentally anti-democratic provision of a ballot proposition that delegates authority to make California law, without any safeguards, to an ad hoc group of individuals, serving in their personal capacities and appointed by the staff of an unelected, unaccountable, foreign organization. In 2007, OEHHA, as the lead state agency for the assessment of health risks from environmental contaminants, evaluated the carcinogenicity of the herbicide glyphosate and concluded: Based on the weight of the evidence, glyphosate is judged unlikely to pose a cancer hazard to humans. Every other regulatory agency around the world that has evaluated the carcinogenicity of glyphosate has reached the same conclusion, including the U.S. Environmental Protection Agency in September 2016 and three other regulatory bodies in March Nevertheless, on September 4, 2015, OEHHA issued notice of its intent to list glyphosate under Proposition 65 as a chemical known to the state to cause cancer pursuant to the so-called Labor Code listing mechanism. In doing so, OEHHA asserted that it was compelled by statute to accept this contrary cancer classification of the International Agency for Research on Cancer ( IARC ), an unelected, unaccountable, and avowedly nonregulatory body based in Lyon, France. OEHHA subsequently added glyphosate to the Proposition 65 list on July 7,

10 In listing glyphosate, neither OEHHA nor any other California governmental entity reevaluated OEHHA s 2007 assessment of the science on glyphosate, considered the process that the ad hoc group of individuals hand-picked by IARC followed in identifying glyphosate as a probable carcinogen, weighed scientific or other evidence, or otherwise played any substantive role in the decision-making process. OEHHA did not consider, for example, that critical scientific data were not disclosed to the IARC working group that evaluated glyphosate, even though the chair of the working group was aware of those data and admitted under oath that the data could have altered IARC s analysis. Instead, pursuant to Proposition 65, OEHHA believes it is required to list and thus regulate any chemical that IARC classifies as a carcinogen, regardless of whether OEHHA or any other California official agrees with that assessment. In January 2016, Monsanto sued OEHHA in Fresno County Superior Court to challenge the constitutionality of the listing of glyphosate. The Labor Code listing mechanism is fundamentally antithetical to our system of representative democracy. Neither IARC nor any individual it selected to make the classification decision on glyphosate is accountable to the California electorate. California voters can place no check on IARC s decision-making, either directly or indirectly. And critically, no California governmental entity serves as the ultimate decision-maker to ensure that IARC s classifications are appropriate to incorporate into California law. Instead, IARC s classification of glyphosate became California law automatically following a ministerial process by OEHHA, even though OEHHA itself previously reached the opposite conclusion. OEHHA s listing of glyphosate under Proposition 65 based solely on IARC s classification is unconstitutional for several reasons: 10

11 (1) It violates Article II, Section 12 of the California Constitution, which prohibits the use of the initiative process to grant a power to a non-governmental entity; (2) It derives from an unconstitutional delegation of rulemaking authority; (3) It violates Monsanto s right to procedural due process under the California and U.S. Constitutions; and (4) It violates the U.S. Constitution s guarantee of a republican form of government i.e., one based on representative democracy. In addition, Monsanto now faces legal risk if it does not place a Proposition 65 warning on its glyphosate-based products, effectively compelling Monsanto to engage in false speech, in violation of its rights to free speech under the California and U.S. Constitutions. The trial court erred in rejecting these arguments at the pleadings stage. In ruling that the Labor Code listing mechanism does not violate Article II, Section 12 of the California Constitution, for example, the trial court applied an unduly formalistic interpretation that undermines the intent of that provision: to avoid misuse of the initiative process to confer special privilege or advantage on unaccountable organizations like IARC. In so doing, the trial court approved the unfettered discretion that Proposition 65 grants to this unaccountable, foreign body s employees and the individuals they select to evaluate chemicals. The court also provided a roadmap for proponents of future initiatives, who will seek for their own policy goals to whittle away at the foundations of representative lawmaking in California. The trial court also erroneously disregarded controlling case law prohibiting delegations of rulemaking authority to external, non- 11

12 governmental entities such as IARC. Such delegations are per se unconstitutional unless a governmental entity (either the Legislature or a regulatory agency) exercises the final say. See, e.g., Int l Ass n of Plumbing & Mech. Officials v. Cal. Bldg. Standards Comm n, 55 Cal. App. 4th 245, 253 (1997) ( IAPMO ). The trial court compounded this error by refusing Monsanto s request to amend its complaint to address the legal standard articulated by the trial court, effectively denying Monsanto the ability to provide evidence of improprieties within the IARC decisionmaking process. Likewise, the trial court relied on dicta or the relative dearth of directly applicable case law to reject Monsanto s procedural due process and Guarantee Clause challenges. And it refused to consider Monsanto s free speech challenge, erroneously ruling that Monsanto must first establish, through expensive litigation, that it is required to apply a warning and is liable for potentially extortionate penalties before the court will consider whether that warning is compelled false speech. Monsanto has alleged facts that are sufficient to demonstrate that the Labor Code listing of glyphosate is unconstitutional. The trial court s dismissal of this action on the pleadings was improper, and the judgment should be reversed to allow this case to proceed to discovery and trial. II. STATUTORY AND REGULATORY BACKGROUND A. Proposition 65 and the Labor Code Listing Mechanism. The Safe Drinking Water and Toxic Enforcement Act of 1986 ( Proposition 65 ) requires OEHHA to publish a list of those chemicals known to the state to cause cancer or reproductive toxicity and provides mechanisms by which OEHHA may place a chemical on the list. Health & Safety Code (a)-(b). At issue here is the so-called Labor Code 12

13 listing mechanism of Section (a), which provides that the list shall include at a minimum those substances identified by reference in Labor Code Section 6382(b)(1) and those substances identified additionally by reference in Labor Code Section 6382(d). Id (a). Section 6382(b)(1) of the Labor Code, in turn, identifies by reference [s]ubstances listed as human or animal carcinogens by [IARC]. OEHHA has adopted regulations implementing the Labor Code listing mechanism. As relevant here, those regulations provide that [a] chemical or substance shall be included on the [Proposition 65] list if it is classified by [IARC] in its IARC Monographs series on the Evaluation of Carcinogenic Risks to Humans... as:... (2) Probably carcinogenic to humans (Group 2A) with sufficient evidence of carcinogenicity in experimental animals Cal. Code Regs (b). OEHHA s regulations further provide that, in proposing to list a substance, the agency shall publish a notice of intent to list the chemical or substance and provide a 30 day public comment period on whether or not the chemical or substance has been identified by reference in Labor Code section 6382(b)(1). Comment is restricted to whether the identification of the chemical or substance meets the requirements of this section. The lead agency shall not consider comments related to the underlying scientific basis for classification of a chemical by IARC as causing cancer. Id (c) (emphasis added). B. Evolution of the Labor Code Listing Mechanism. The Labor Code listing mechanism was not originally understood to impose on OEHHA an ongoing duty to list substances that are classified by IARC as carcinogens. Instead, it was understood to incorporate by 13

14 reference only those substances that were classified as carcinogens by IARC as of 1986 when Proposition 65 was enacted. In other words, the Labor Code mechanism was used to create the initial Proposition 65 list by cross-reference to IARC s list, but was not understood to be a mechanism for updating that list on an ongoing basis. 1 In 1989, for example, a labor union sued the Governor, arguing that chemicals that had been classified by IARC as carcinogenic to animals (and not just those classified as carcinogenic to humans) must be added to the initial Proposition 65 list. See AFL-CIO v. Deukmejian, 212 Cal. App. 3d 425 (1989). In ruling that chemicals classified by IARC as carcinogenic to animals must be included on the initial list, the Court of Appeal explained: Section , subdivision (a) [the Labor Code listing mechanism], insures the minimum content of the initial list, and section , subdivision (b) [the other three listing mechanisms], directs both defendant and the Panel to engage in a diligent, thorough and continuing search for additional chemicals which evolving scientific knowledge demonstrates are subject to [Proposition 65]. Id. at 440 (emphasis added). Thus, the court did not view the Labor Code mechanism to be an appropriate method for updating the Proposition 65 list on an ongoing basis. Likewise, following Deukmejian, OEHHA proceeded to revise the list on an ongoing basis using only the other listing mechanisms set forth in subdivision (b) of Section i.e., the State s Qualified Experts, Authoritative Body, and Formally Required to 1 Indeed, the Ballot Pamphlet distributed before the enactment of Proposition 65 informed voters only that the Proposition 65 list would include the chemicals already listed as known carcinogens by IARC. Ballot Pamph., Gen. Elec., p. 54 (RJN, Ex. A). 14

15 Be Labeled listing mechanisms. See Cal. Chamber of Commerce v. Brown, 196 Cal. App. 4th 233, 244 (2011). OEHHA [even] issued publications explaining and describing these as three mechanisms by which carcinogens and reproductive toxins are listed. Id. In 2003, seventeen years after the enactment of Proposition 65, OEHHA for the first time used the Labor Code mechanism to add a new chemical to the Proposition 65 list. Id. at And it was not until 2011 (eight years later) that the Court of Appeal first ruled that the Labor Code mechanism, as a matter of statutory interpretation, imposes on OEHHA a duty to list chemicals classified by IARC on an ongoing basis. Id. at 260. Importantly, the Court of Appeal has never considered whether that statutory framework pursuant to which future decisions of IARC are incorporated by reference into California law is constitutional. That is the issue presented by this appeal. III. FACTUAL BACKGROUND A. Glyphosate Is A Widely Used and Effective Herbicide. Glyphosate is the most widely used herbicide in California and worldwide. 1 Appellant s Appendix ( AA ) at 52 (First Amended Petition and Complaint ( Am. Pet. ) 26). It has many environmental and public health benefits: it allows farmers to control weeds with minimal tilling of soil; it is used to control vegetation in utility right-of-ways and along roadsides and railways; and it is widely used by government agencies and wildlife organizations in California to control vegetation to reduce the risk of wildfires, to enhance water flow and control invasive species in aquatic environments, and to protect and restore wildlife habitats threatened by invasive, non-native vegetation. 1 AA at (Am. Pet ). 15

16 B. OEHHA and Every Other Governmental Body That Has Assessed Glyphosate Has Determined That Glyphosate Does Not Cause Cancer in Humans. In 1997 and again in 2007, OEHHA conducted risk assessments of glyphosate for purposes of setting a Public Health Goal for glyphosate in drinking water. Among other things, OEHHA staff reviewed several carcinogenicity studies in rodents. Following an extensive process of notice and comment, and based on its review of the scientific data, OEHHA concluded: Based on the weight of the evidence, glyphosate is judged unlikely to pose a cancer hazard to humans. 1 AA at 53 (Am. Pet ). Likewise, every other regulatory body that has reviewed the research on glyphosate including, among others, the U.S. Environmental Protection Agency; the German Federal Institute for Risk Assessment; the European Food Safety Authority (on behalf of the European Union); and the Canadian Pest Management Regulatory Authority has determined that glyphosate is not carcinogenic to humans. 1 AA at (Am. Pet ). In fact, since IARC s determination in 2015 (as described below), no less than nine regulatory bodies have reviewed the research on glyphosate and concluded that it is not a carcinogen. C. Contrary to OEHHA s Prior Determination and Every Other Governmental Assessment of Glyphosate, IARC Determined that Glyphosate Is a Probable Carcinogen. IARC is a specialized agency of the World Health Organization that is based in Lyon, France. 1 AA at 57 (Am. Pet. 49). One of IARC s activities is its Monograph program, whereby IARC convenes groups of scientists on an ad hoc basis ( working groups ) to review and summarize scientific research on the carcinogenicity of a wide range of chemicals, 16

17 occupational exposures, lifestyle factors, and other agents. IARC publishes the conclusions of these working groups in its monograph series, Monographs on the Evaluation of Carcinogenic Risks to Humans ( Monographs ). Id. 49, 51. IARC convenes a separate working group for each volume of the Monographs, which may cover a single agent, several related agents, or even a diverse mix of agents. IARC employees select the individual scientists who will form the working group for evaluating a particular agent. Each working group participant serves as an individual scientist and not as a representative of any organization, government or industry. Id. at , 60. The working group s classification is final and is not subject to public comment, review, correction, request for reconsideration, or appeal. Id. at The working group is solely responsible for making classification determinations. A substance can be classified in one of five groups: carcinogenic to humans (Group 1), probably carcinogenic to humans (Group 2A), possibly carcinogenic to humans (Group 2B), not classifiable as to its carcinogenicity to humans (Group 3), or probably not carcinogenic to humans (Group 4). Id. at The working group also is required to classify the evidence of carcinogenicity from studies in humans and animals, respectively, into the following categories: sufficient evidence of carcinogenicity ; limited evidence of carcinogenicity ; inadequate evidence of carcinogenicity ; or evidence suggesting lack of carcinogenicity. Id. at Thus, for each agent evaluated, the working group issues a finding of whether there is sufficient evidence of carcinogenicity in both animals and humans. 17

18 In March 2015, IARC convened a working group on glyphosate, which concluded that glyphosate is probably carcinogenic to humans (Group 2A). Id. at The working group also concluded that there was sufficient evidence of carcinogenicity in experimental animals, relying on four long-term carcinogenicity studies in rodents (while disregarding at least ten other animal studies). Id. 92, 94. Notably, in its risk assessment of glyphosate in 2007, OEHHA had evaluated these same four studies (or reviews of them) and concluded that glyphosate is unlikely to pose a cancer hazard to humans. Id. 95. IARC and OEHHA thus reached different conclusions based on the same underlying data. D. Based Solely on the IARC Working Group s Decision, OEHHA Listed Glyphosate as a Carcinogen. On September 4, 2015, OEHHA published notice of its intent to add glyphosate to the Proposition 65 list pursuant to the Labor Code listing mechanism. OEHHA explained that glyphosate meets the requirements for listing solely because (1) IARC classified glyphosate as a probable carcinogen, and (2) IARC concluded that there was sufficient evidence of carcinogenicity in experimental animals. Id. at OEHHA did not make any other findings and refused to consider comments about the underlying science, explaining that these are ministerial listings. Id. 99 (emphasis added). OEHHA even declared that it cannot consider scientific arguments concerning the weight or quality of the evidence considered by IARC when it identified these chemicals and will not respond to such comments if they are submitted. Id. (emphasis added). On March 28, 2017, OEHHA issued its final decision to list glyphosate. OEHHA delayed the listing pending a decision by this Court regarding Monsanto s request for a stay. That decision, denying 18

19 Monsanto s stay request, was issued on June 15, On June 26, 2017, OEHHA announced that it was formally adding glyphosate to the Proposition 65 list, effective July 7, E. The Trial Court Dismisses Monsanto s Action at the Pleading Stage, and Monsanto Appeals. On January 21, 2016, Monsanto filed a petition for writ of mandate and complaint for injunctive and declaratory relief ( Petition and Complaint ) in Fresno County Superior Court, seeking to enjoin OEHHA from listing glyphosate as a carcinogen. 1 AA at 8. Monsanto alleged that the Labor Code listing mechanism, as applied to glyphosate, violates the California and U.S. Constitutions. Id. at Monsanto subsequently filed a First Amended Petition and Complaint. Id. at 45. A group of intervenors (the Plaintiff-Intervenors ) filed a Complaint-in-Intervention, joining in Monsanto s arguments. 2 Id. at 36. OEHHA moved for judgment on the pleadings, and a group of intervenors (the Sierra Club Intervenors ) demurred. 3 Id. at 296, 301. The trial court granted OEHHA s motion for judgment on the pleadings and the Sierra Club Intervenors demurrer, holding that Monsanto and the Plaintiff- Intervenors had failed to state facts sufficient to constitute a cause of action. 2 AA at 493. The trial court entered judgment dismissing, with prejudice, 2 The Plaintiff-Intervenors include: California Citrus Mutual; the Western Agricultural Processors Association; the California Cotton Ginners and Growers Associations; the California Grain and Feed Association; the Almond Alliance of California; and the Western Plant Health Association. 3 The Sierra Club Intervenors include: Sierra Club; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC; Natural Resources Defense Council; and Environmental Law Foundation. 19

20 Monsanto s First Amended Petition and Complaint and Plaintiff- Intervenors Complaint-in-Intervention on March 20, Id. at 504. Two days later, Monsanto timely appealed from the judgment, id. at 523, and the Plaintiff-Intervenors joined in Monsanto s appeal, id. at 527. IV. STANDARD OF REVIEW On appeal from an order of dismissal after an order sustaining a demurrer, the standard of review is de novo. Stearn v. Cty. of San Bernardino, 170 Cal. App. 4th 434, 439 (2009). The Court must exercise [its] independent judgment about whether the complaint states a cause of action as a matter of law. Id. The properly pleaded material factual allegations, together with facts that may be properly judicially noticed, are accepted as true. Reversible error exists if facts were alleged showing entitlement to relief under any possible legal theory. Roman v. Cty. of Los Angeles, 85 Cal. App. 4th 316, (2000); see also All. Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1232 (1995) (the court s primary task is to determine whether the facts alleged provide the basis for a cause of action against defendants under any theory ). An order granting a motion for judgment on the pleadings is subject to the same de novo standard of review. Kapsimallis v. Allstate Ins. Co., 104 Cal. App. 4th 667, 672 (2002). Further, [w]here a demurrer is sustained without leave to amend, the reviewing court must determine whether the trial court abused its discretion in denying leave to amend. Roman, 85 Cal. App. 4th at 322. It is an abuse of discretion to deny leave to amend if there is a reasonable possibility that the pleading can be cured by amendment. Id. Regardless of whether a request therefore was made, unless the complaint shows on its 20

21 face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion. Id. V. ARGUMENT The Labor Code listing mechanism, as applied by OEHHA in proposing to list glyphosate, violates the California and U.S. Constitutions. 4 It delegates rulemaking authority to an unelected, international body that is not accountable to the California electorate and is not subject to adequate procedural safeguards or oversight. This method of lawmaking violates a specific provision of the California Constitution that bars such delegations of lawmaking authority to non-governmental entities. See Cal. Const. art. II, 12. It also is fundamentally contrary to the traditional hallmarks of due process and representative democracy. See, e.g., NRDC v. EPA, 464 F.3d 1, 9 (D.C. Cir. 2006) ( [A]ssigning lawmaking functions to international bodies... would raise serious constitutional questions in light of the nondelegation doctrine, numerous constitutional procedural requirements for making law, and the separation of powers. ). The constitutional infirmity inherent in the Labor Code listing process, particularly as applied to glyphosate, is three-fold: First, neither IARC nor the members of the working group that made the determination on glyphosate are subject to the oversight or control of a U.S. governmental entity, let alone a California one. As such, they are not accountable to the California electorate. Neither the California 4 An initiative is subject to the same constitutional limitations as are the Legislature and the statutes that it enacts. See Legislature v. Deukmejian, 34 Cal. 3d 658, 674 (1983). 21

22 voters nor their elected or appointed representatives are able to provide any check on IARC s decision-making. Second, IARC s classification determinations are final and not subject to review by any other entity. No California or U.S. governmental body has any authority to approve, reject, or modify classification decisions made by IARC working groups. OEHHA, for example, plays no substantive role in Labor Code listings. By regulation, OEHHA s role is limited to ensuring that the listed substance is identified accurately and that IARC has made findings about the sufficiency of the evidence (pursuant to IARC s own definition of sufficient evidence and independent judgment as to whether that standard is met). 27 Cal. Code Regs (b). Indeed, OEHHA s regulations state explicitly that the agency will not consider comments related to the underlying scientific basis for an IARC decision. Id (c). As a result, IARC classifications become California law after what OEHHA has described as a ministerial and essentially automatic process. Third, IARC itself is not subject to adequate procedural safeguards. IARC can change its procedures at any time, and IARC affords its working groups, including the one that considered glyphosate, wide discretion to deviate from IARC s procedures. Procedural defects are present in virtually every aspect of IARC s consideration of glyphosate, from the systemic anti-industry bias of the working group members who serve as the decision-makers, to the selective exclusion of relevant studies, to the absence of any process for review of the working group s classification. These overarching concerns impact each of the independent constitutional violations alleged in Monsanto s Amended Petition and Complaint. And the net result is clear: the Labor Code listing mechanism 22

23 allowed an international body to write California law on glyphosate with no accountability to the California electorate, no safeguards to prevent arbitrary decision-making, and no substantive involvement by any governmental entity. This exceptional method of rulemaking fundamentally disregards principles of good government and accountability to the People and violates both the California and U.S. Constitutions. A. THE LABOR CODE MECHANISM VIOLATES ARTICLE II, SECTION 12 OF THE CALIFORNIA CONSTITUTION. Article II, Section 12 of the California Constitution provides: No amendment to the Constitution, and no statute proposed to the electors by the Legislature or by initiative, that names any individual to hold any office, or names or identifies any private corporation to perform any function or to have any power or duty, may be submitted to the electors or have any effect. Cal. Const. art. II, 12. Here, in enacting Proposition 65 and its Labor Code listing mechanism, the California electorate granted to a group of private individual[s] and the non-governmental entity that selected them the power to identify chemicals such as glyphosate for inclusion on the Proposition 65 list (27 Cal. Code Regs ), in violation of Article II, Section 12. Article II, Section 12 was enacted to prevent the initiative from being used to confer special privilege or advantage on specific persons or organizations. Calfarm Ins. Co. v. Deukmejian, 48 Cal. 3d 805, 832 (1989). The unique and powerful role of IARC, and the individuals on its working groups, in the Labor Code listing process is a special privilege that is not afforded to other organizations or individuals. This case 23

24 therefore presents precisely the problem that Article II, Section 12 was designed to prevent. Applying a cramped reading of the Constitution, the trial court wrongly held that IARC is not a private corporation and that Proposition 65 does not confer any power on IARC. 2 AA at 499. The trial court s ruling would permit proponents of ballot propositions to circumvent Article II, Section 12 simply by crafty wording of ballot propositions to avoid naming a single individual to hold an office and to avoid designating a legally incorporated entity to have a power. To effectuate its purpose, Article II, Section 12 cannot be read so narrowly. 1. The Labor Code Mechanism Confers a Power on IARC. The Labor Code listing mechanism identifies IARC by reference to a section of the Labor Code and grants IARC the power to determine which chemicals are placed on the Proposition 65 list as known to the state to cause cancer. See 27 Cal. Code Regs (b). That list is a regulation, 27 Cal. Code Regs ; thus, IARC is making California law. The trial court ruled, however, that Proposition 65 did not confer any power on IARC, reasoning that IARC did not gain any new powers or duties from Proposition 65 or the Labor Code mechanism because IARC was formed prior to the enactment of Proposition 65, and its duties have always included issuing a list of possible carcinogens. 2 AA at 516. But nothing in Article II, Section 12 exempts pre-existing organizations from its scope. For example, that a utility company has always set safety standards does not mean that a ballot initiative can assign it the power to write those standards into law. It is irrelevant whether IARC sought the power granted by Proposition 65, behaves any differently after the enactment of Proposition 65, or perceives the Labor Code 24

25 mechanism as a benefit. The practical effect is that IARC s decisions become California law with no ability for any California governmental body to intervene. See Section V.B.1, infra. There can be no greater power. Tain v. State Board of Chiropractic Examiners, 130 Cal. App. 4th 609 (2005), is instructive. There, the Court of Appeal addressed an amendment to the Chiropractic Act providing that any high school or college having status with an accrediting agency (defined to include the Council on Chiropractic Education) would be eligible for licensing approval by the Board of Chiropractic Examiners. The court upheld the constitutionality of the amendment, reasoning that the amendment did not afford the non-governmental Council any power because the governmental Board remains responsible for accrediting decisions and consequently could reject a chiropractic school that [the Council] approves, and can approve a chiropractic school that the [the Council] rejects. Id. at 633. In other words, the Council did not have any power, because the Board retained ultimate decision-making authority. Here, in contrast, OEHHA is required to list any chemical designated by IARC as a human or animal carcinogen. See 27 Cal. Code Regs (b). Thus, unlike the Board in Tain, OEHHA does not remain[] responsible for Labor Code listings and does not have authority to reject determinations made by IARC. As a result, the Labor Code listing mechanism of Proposition 65, unlike the amendment in Tain, confers on IARC a power namely, the power to identify chemicals such as glyphosate for placement on the list of chemicals regulated under Proposition

26 2. IARC and Its Working Groups Are Private. Contrary to the trial court s ruling, IARC is private within the meaning of Article II, Section 12. IARC is not a state or federal governmental entity and is not accountable to any particular electorate. Neither the U.S. government nor the California government controls IARC, appoints its employees, or selects the members of its working groups. IARC therefore does not function as a public entity. In Calfarm, the Supreme Court applied Article II, Section 12 to invalidate an initiative s creation of a nonprofit, consumer advocacy corporation. 48 Cal. 3d at 832. The Court held that the corporation was not public, even though it was established by an interim board designated by the Insurance Commissioner a public officer because the corporation would be governed by its members, not by a public official. Id. at 834. Likewise, IARC is controlled collectively by its member countries, and IARC classifications are made by individual members of its working groups, not by any public official. Indeed, the IARC working group members are not even appointed by a public official, as they were in Calfarm. Furthermore, IARC s policies state explicitly that each member of a working group serves as an individual scientist and not as a representative of any organization, government or industry. 1 AA at 59 (Am. Pet. 60). Although not identified by name in Proposition 65, these individuals hold offices with power granted by the ballot proposition. As a practical matter, IARC decisions, which become California law, are made by a group of individual scientists serving in their private capacities, not by any accountable public official. IARC is no more a public entity than the Stanford chemistry department. 26

27 3. IARC Is a Corporation. The trial court further erred in finding that IARC is not a corporation for purposes of Article II, Section 12. Merriam-Webster defines corporation to mean a body formed and authorized by law to act as a single person although constituted by one or more persons and legally endowed with various rights and duties including the capacity of succession. 5 IARC fits this definition: it is a body formed and authorized pursuant to a resolution of the World Health Organization; it is legally endowed with various rights and duties pursuant to its implementing statute, rules, and regulations; and it has the capacity of succession (i.e., it exists in perpetuity). See IARC Statute, Rules and Regulations (14th ed.) (RJN, Ex. B). Case law applying Article II, Section 12 confirms that it was intended to apply to a range of organizations, not just to corporations in a formalistic sense. In Calfarm, for example, the Supreme Court found that a nonprofit corporation is a private corporation within the meaning of Article II, Section Cal. 3d at 834. Interpreting the term private corporation broadly to encompass a range of organizations that are not accountable to governmental bodies is consistent with the intent of Article II, Section 12 to prevent abuse of the initiative process to confer special privilege or advantage on specific non-governmental organizations. Id. at Merriam-Webster Online, [last visited July 20, 2017]. A dictionary is a proper source to determine the usual and ordinary meaning of a word or phrase in a statute. E.W. Bliss Co. v. Superior Ct., 210 Cal. App. 3d 1254, 1258 n.2 (1989). 27

28 Surely Article II, Section 12 would apply to a partnership or an unincorporated association such as a labor union, even though these business entities are not corporations in a technical sense of the word. And Respondents undoubtedly would object, for example, to an initiative that delegated lawmaking authority to the Joint Glyphosate Task Force ( JGTF ), of which Monsanto is a member, even though JGTF is not itself a legal corporation but rather an unincorporated consortium of companies joining resources and efforts to pursue a common objective. The potential mischief and harm that would ensue from attributing governmental powers to such unaccountable, private entities would be the same regardless of their legal form of organization. An overly formalistic reading of Article II, Section 12 that would exclude organizations like IARC (or the JGTF for that matter) from the definition of corporation would make it easy for initiative proponents to circumvent the Constitutional prohibition. See City of Costa Mesa v. Connell, 74 Cal. App. 4th 188, 195 (1999) ( We construe constitutional enactments in a manner that comports with reason, avoids absurd results and fulfill[s] the apparent intent of the framers. ) In short, the trial court s ruling impermissibly exalts form over substance. See Civ. Code 3528 ( The law respects form less than substance. ); Westoil Terminals Co. v. Harbor Ins. Co., 73 Cal. App. 4th 634, 639 (1999) (to exalt form over substance would violate the maximum of jurisprudence set forth in Civil Code section 3528 ). The Labor Code listing mechanism confers upon IARC an international, nongovernmental organization as well as its individual working group members, a power that is not afforded to other organizations or individuals, in clear violation of Article II, Section

29 B. THE LABOR CODE LISTING MECHANISM CONSTITUTES AN UNCONSTITUTIONAL DELEGATION OF RULEMAKING AUTHORITY TO IARC. [T]he doctrine prohibiting delegation of legislative power... is well established in California. Kugler v. Yocum, 69 Cal. 2d 371, 375 (1968). The trial court, however, ruled erroneously that the Labor Code mechanism does not constitute a delegation of authority. In so holding, the trial court applied flawed reasoning to distinguish controlling case law from the Court of Appeal. As discussed below, the trial court s ruling that the Labor Code mechanism does not constitute a delegation of authority at all, let alone an unlawful one, has no basis in fact or law. 1. The Trial Court Erroneously Disregarded Binding Precedent That Prohibits Delegations of Rulemaking Authority to Non-Governmental Entities Like IARC. It is well settled that a state statute may not incorporate by reference the future determinations of an outside entity unless the Legislature or a state regulatory agency has the final say over whether the determination becomes law. See Light v. State Water Res. Control Bd., 226 Cal. App. 4th 1463, 1491 (2014); Plastic Pipe & Fittings Ass n v. Cal. Bldg. Standards Comm n, 124 Cal. App. 4th 1390, 1410 (2004); IAPMO, 55 Cal. App. 4th at 253. Thus, while non-governmental entities may play a role in regulatory decision-making, the doctrine of unlawful delegation requires the Legislature or a regulatory agency to exercise the final say over whether any particular regulation becomes law. Light, 226 Cal. App. 4th at In IAPMO, for example, the Court of Appeal held that the Legislature, in setting state building standards, could adopt by reference model building codes published by IAPMO a private trade association composed of state and local regulators. But the court ruled that the state 29

30 Legislature could adopt only an existing version of the model code and could not take into account future revisions without improperly delegating lawmaking authority to the private entity that produced the code. 55 Cal. App. 4th at 254 (emphasis added). The court reasoned that while the Legislature can provide for and encourage the participation of private associations in the regulatory process, it must stop short of giving such groups the power to initiate or enact rules that acquire the force of law. Id.; see also Plastic Pipe, 124 Cal. App. 4th at 1410 ( For the Legislature to grant a private association the power to make law with no direction from the Legislature and no review by a state agency would be unconstitutional. ). Rather, the Legislature or a state agency must exercise ultimate discretion to decide whether the model building code standards become state law. IAPMO, 55 Cal. App. 4th at 255. Here, no California governmental entity exercises the final say over whether IARC classification decisions become California law. Indeed, OEHHA exercises no independent judgment at all. If IARC classifies a chemical as a probable carcinogen and declares that there is sufficient evidence of carcinogenicity in experimental animals pursuant to IARC s own definition of sufficient evidence and the working group s own judgment as to whether that standard is met then OEHHA must add the chemical to the Proposition 65 list. See 27 Cal. Code Regs (b) (a chemical shall be included on the list if IARC classifies it as probably carcinogenic with sufficient evidence of carcinogenicity in experimental animals). For this reason, OEHHA describes Labor Code listings as ministerial and refuses to take public comment on the weight or quality of the evidence considered by IARC. 1 AA at 68 (Am. Pet. 99). In 30

31 other words, OEHHA eschews any substantive role in the Labor Code listing process. OEHHA s abdication of responsibility for Labor Code listings as mandated by the Proposition 65 statute is particularly striking in the case of glyphosate. In 2007, OEHHA s own scientific experts evaluated the carcinogenicity of glyphosate and concluded that glyphosate is unlikely to pose a cancer hazard to humans. Id. at And yet, notwithstanding this finding, OEHHA had no choice but to list glyphosate once IARC classified the herbicide as a probable carcinogen with sufficient evidence of carcinogenicity in experimental animals. Nor did OEHHA have discretion to consider the determinations by other regulatory and scientific authorities that glyphosate does not pose a carcinogenic risk to humans. Id. at Instead, once IARC made its determination, OEHHA s hands were tied: IARC s determination becomes California law following an exercise in paperwork. In this manner, the Labor Code listing mechanism improperly transforms the decisions of IARC working groups into California law. See, e.g., Exxon Mobil Corp. v. OEHHA, 169 Cal. App. 4th 1264, 1276 n.10 (2009) (classification of a chemical as a carcinogen pursuant to Proposition 65 is a quasi-legislative action, or rulemaking). These listing determinations have serious legal consequences: they result in regulation of the listed chemicals under California law; they require businesses to undertake evaluations of possible exposures or discharges; and, in many cases, they require businesses to change their use of a chemical or provide warnings to those who may be exposed to the chemical. See Health & Safety Code , The listing of a chemical also subjects businesses who sell products containing the chemical to the onerous 31

32 enforcement provisions of Proposition 65, including penalties of up to $2,500 per violation. See Health & Safety Code (b) and (d). The trial court erroneously brushed aside the IAPMO line of cases, reasoning that the primary concern expressed by the courts in those cases was with allowing members of the regulated industries to have control over the process of making regulations or legislation that affected their businesses. 2 AA at 514. That characterization of the case law is simply incorrect. In IAPMO and Plastic Pipe, the private associations at issue were composed primarily of local and state regulators. See IAPMO, 55 Cal. App. 4th at 251; Plastic Pipe, 124 Cal. App. 4th at In other words, the outside entity creating the model codes (IAPMO) was not composed of members of the regulated industries; in fact, quite the opposite. And neither IAPMO nor Plastic Pipe expressed any concerns that the delegation of authority may be unconstitutional because the delegate was a member of the regulated industry. In sum, under IAPMO and its progeny, a state statute cannot constitutionally incorporate by reference future determinations of an outside entity unless the Legislature or a state regulatory agency exercises ultimate discretion to decide whether the determination becomes state law. In the case of glyphosate, IARC was the decision-maker: IARC decided whether to consider classifying glyphosate as a carcinogen, IARC convened the working group of scientists to evaluate glyphosate, and the IARC working group determined that glyphosate is a probable carcinogen. Only as a result of IARC s decision did OEHHA propose to take the ministerial step of placing glyphosate on the Proposition 65 list of carcinogens. And in doing so, OEHHA asserted that it had no discretion in the matter. Under 32