An appeals panel found a California law sour, which penalizes home rule communities for establishing taxes to discourage consumption of sugary drinks, saying the law trods on the constitution.
The recent decision was written by Associate Justice Stacy Boulware Eurie, with concurrence from Associate Justices Laurie Earl and Harry Hull Jr., of California Third District Appellate Court. The decision favored Cultiva La Salud, a Fresno nonprofit group that promotes healthy diets, and Martine Watkins, a Santa Cruz City Council member, in their dispute with the state of California.
Between 2014 and 2016, Berkeley, Albany, San Francisco, Oakland and other cities, using their home rule powers, imposed special taxes on soda and other beverages with high amounts of sugar. If a municipality has home rule, it can enact laws for municipal matters, tailored to local desires. Home rule is based on the understanding municipalities know their needs better than does the state.
In response to the actions by the cities, California put into effect in 2018 the Keep Groceries Affordable Act, which prohibits home rule municipalities from laying taxes on certain grocery items. If a city applies such taxes, it can lose all tax revenue from sales and use taxes.
Cultiva and Watkins challenged the Act in Sacramento County Superior Court, claiming the Act violated the constitutional authority of California's charter cities to exercise their hoke rule power. Judge Shelleyanne Chang agreed the state overstepped its authority in establishing the Act, prompting the state to appeal.
Appellate Justice Boulware Eurie was on board with Chang's finding.
The Act "improperly uses the threat of crippling penalties to chill charter cities from exercising their constitutional rights," Boulware Eurie said.
Boulware Eurie added that arguments for the Act "lack rational reasoning."
One such argument was that the Act's penalty was intended to maintain uniform taxation. However, Boulware Eurie concluded, quoting a 1970 California appellate ruling, the purpose was to "'chill the assertion of constitutional rights.'"
Cultiva has been represented by Jarvis Fay, Benjamin P. Fay, Edward K. Low and Carolyn Liu, of the Oakland firm of Jarvis Fay.
The state has been defended by California Attorney General Rob Bonta and assistant attorneys Tamar Pachter, Molly K. Mosley, Craig D. Rust, Robert E. Asperger and Lauren E. Freeman.
Friend-of-the-court arguments in support of the state were filed by the California Chamber of Commerce, California Grocers Association, California Retailers Association, Consumer Brands Association and American Beverage Association.
Friend-of-the-court arguments for Cultiva were submitted by the League of California Cities, California State Association of Counties, American Heart Association, California Dental Association, Center for Public Health Law Research, Center for Science in the Public Interest, Law Professors and Changelab Solutions.
Other arguments for Cultiva came from the Georgetown Project on State and Local Government Policy and Law, Healthy Food America, National Alliance for Hispanic Health, Network for Public Health Law, Praxis Project, Public Health Advocates, Public Health Institute, Public Health Law Center and Public Health Law Watch.