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Marilley v. Bonham

United States Court of Appeals, Ninth Circuit

December 21, 2016

Kevin Marilley; Salvatore Papetti; Savior Papetti, on behalf of themselves and similarly situated, Plaintiffs-Appellees,
v.
Charlton H. Bonham, in his official capacity as Director of the California Department of Fish and Game, Defendant-Appellant.

          Argued and Submitted En Banc June 21, 2016 San Francisco, California

         Appeal from the United States District Court for the Northern District of California Donna M. Ryu, Magistrate Judge, Presiding D.C. No. 4:11-cv-02418-DMR

          M. Elaine Meckenstock (argued) and Gary Alexander, Deputy Attorneys General; Annadel A. Almendras, Supervising Deputy Attorney General; Robert W. Byrne, Senior Assistant Attorney General; Kamala D. Harris, Attorney General; Office of the Attorney General, Oakland, California; for Defendant-Appellant.

          Stuart G. Gross (argued) and Jared M. Galanis, Gross Law, San Francisco, California; Todd R. Gregorian and Tyler A. Baker, Fenwick & West LLP, Mountain View, California; for Plaintiffs-Appellees.

          Before: Sidney R. Thomas, Chief Judge, and Stephen Reinhardt, Kim McLane Wardlaw, William A. Fletcher, Marsha S. Berzon, Milan D. Smith, Jr., Mary H. Murguia, Jacqueline H. Nguyen, Andrew D. Hurwitz, John B. Owens, and Michelle T. Friedland, Circuit Judges.

         SUMMARY[*]

         Civil Rights

         The en banc court reversed the district court's summary judgment in favor of plaintiffs and remanded for the district court to enter summary judgment for California in an action brought by a class of nonresident commercial fishers challenging California's nonresident fee differential for four commercial fishing licenses, vessel registration and permits.

         The en banc court first held that California's fee differentials for commercial fishing vessel registrations, fishing licenses, Dungeness crab permits, and herring gill net permits fell within the purview of the Privileges and Immunities Clause. The en banc court determined that whether the calculation was made at the general level of all nonresident commercial fishers, or at the specific level of nonresident commercial fishers for Dungeness crab and herring, the fee differentials charged by California were less than the amount by which California subsidized the management of the nonresidents' portions of its commercial fishery. The en banc court therefore held that the fee differentials survived the Privileges and Immunities Clause challenge because the differentials were justified by a substantial reason that was closely related to the differential fees.

         The en banc court held that the fees survived an Equal Protection Clause challenge because California's interest in receiving compensation for its commercial fishery management provided a "rational basis" for its fee differentials.

         Dissenting, Judge M. Smith, joined in full by Hurwitz and Owens and by Reinhardt and Berzon as to Part III, stated the majority assumed away the major defect in its analysis: the fact that nonresident fishermen pay multiple California taxes too, yet nonetheless commence each fishing season thousands of dollars in the hole by virtue of California's discriminatory differentials. In Judge M. Smith's view, the fee differentials are illegal under the Privileges and Immunities Clause.

         Dissenting, Judge Reinhardt, joined by Judge Berzon, concurred in Part III of Judge M. Smith's dissent and agreed that California failed to carry its burden of demonstrating that the differential fees it charges to nonresidents were closely drawn to the achievement of a substantial state objective.

          OPINION

          W. FLETCHER, Circuit Judge

         California charges nonresident commercial fishers higher fees for vessel registrations, licenses, and permits than it charges resident commercial fishers. A certified class of nonresident commercial fishers challenges the fee differentials under the Privileges and Immunities Clause and the Equal Protection Clause. We hold that California's fee differentials do not violate either clause.

         I. Background

         California requires both resident and nonresident commercial fishers to register their vessels and to purchase licenses and permits in order to engage in commercial fishing in the waters of the state. See Cal. Fish & Game Code §§ 7852, 7881 (2013). For many years, California has managed its commercial fishery at a substantial loss. See Cal. Fish & Game Code §§ 710.5(a), 710.7(a)(1) (2007). In Fiscal Year (FY) 2010-11, the year for which we have the most extensive documentation in the record, California's Department of Fish and Game spent approximately $20 million managing its commercial fishery. In the same year, California received approximately $5.8 million in fees-including registration, license, and permit fees paid by residents and nonresidents-from participants in its commercial fishing industry. The approximately $14 million shortfall was covered by California's general tax revenues.

         California has statutorily mandated fees for commercial fishing vessel registrations, licenses, and permits. See Cal. Fish & Game Code §§ 713, 7852, 7881, 8280.6, 8550.5. Fees are adjusted annually based on inflation. Beginning in 1986, California charged nonresidents more than residents for certain commercial fishing registrations, licenses, and permits. In 1986, California for the first time charged nonresidents more than residents for herring gill net permits. In 1993, California for the first time charged nonresidents more for commercial fishing vessel registrations and commercial fishing licenses. In 1995, California for the first time charged nonresidents more for Dungeness crab permits.

         In license year 2010, the fees for resident and nonresident commercial fishers were as follows:

Commercial fishing vessel registration:
Resident: $317.00
Nonresident: $951.50
Commercial fishing license: Resident: $120.75
Nonresident: $361.75
Dungeness crab vessel permits:
Resident: $254.00
Nonresident: $507.50
Herring gill net permits:
Resident: $336.00
Nonresident: $1, 269.00

Cal. Dep't Fish & Game, Digest of California Commercial Fishing Laws and Licensing Requirements (2010). Dungeness crab and herring were (and are) limited entry fisheries for which a limited number of permits was (and is) available.

         Depending on the activity in question, a commercial fisher in California could be required to pay several fees. For example, a fishing vessel owner who personally engaged in fishing for herring was required to pay a vessel registration fee, a commercial fishing license fee, and a herring gill net permit fee. For a California resident holding a single permit, the total cost in 2010 would have been $773.75. For a nonresident, the total cost would have been $2, 582.25, or 3.3 times as much as for a resident. A vessel owner who personally engaged in fishing for Dungeness crab was required to pay a vessel registration fee, a commercial fishing license fee, and a Dungeness crab permit fee. For a California resident, the total cost in 2010 would have been $691.75; for a nonresident, the total cost would have been $1, 820.75, or 2.6 times as much as for a resident. Of the approximately $5.8 million in fees paid to California in FY 2010-11 by the commercial fishing industry, approximately $435, 000 came from fee differentials paid by nonresidents.

         Plaintiffs, a class of nonresident commercial fishers, challenge the four nonresident fee differentials-for commercial fishing vessel registrations, commercial fishing licenses, Dungeness crab permits, and herring gill net permits. Plaintiffs brought a class action in district court against California's Director of the Department of Fish and Game (for convenience, "California"), challenging the fee differentials as violating the dormant Commerce Clause, the Privileges and Immunities Clause, and the Equal Protection Clause. Plaintiffs voluntarily dismissed their dormant commerce clause claim. The parties filed cross-motions for summary judgment on the remaining two claims. The district court ruled for the plaintiff class on its privileges and immunities claim, did not reach its equal protection claim, and entered judgment under Federal Rule of Civil Procedure 54(b). California appealed the grant of Plaintiffs' motion for summary judgment and the denial of its own motion for summary judgment. A divided three-judge panel of this court affirmed. Marilley v. Bonham, 802 F.3d 958 (9th Cir. 2015). We granted rehearing en banc. Marilley v. Bonham, 815 F.3d 1178 (9th Cir. 2016).

         For the reasons that follow, we reverse the grant of summary judgment to Plaintiffs. We remand with directions to grant summary judgment to California.

         II. Standard of Review

         We review de novo a district court's decision granting or denying a motion for summary judgment. Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070, 1086 (9th Cir. 2013).

         III. Discussion

         A. Privileges and Immunities

         Article IV, Section 2, clause 1, of the Constitution provides that "[t]he Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States." The Clause's "primary purpose . . . was to help fuse into one Nation a collection of independent, sovereign States." Toomer v. Witsell, 334 U.S. 385, 395 (1948). The Clause "establishes a norm of comity" between citizens of separate states. Austin v. New Hampshire, 420 U.S. 656, 660 (1975).

         A challenge under the Privileges and Immunities Clause entails "a two-step inquiry." Sup. Ct. of Va. v. Friedman, 487 U.S. 59, 64 (1988); United Bldg. and Constr. Trades Council v. Camden, 465 U.S. 208, 218 (1984); see also Council of Ins. Agents & Brokers v. Molasky-Arman, 522 F.3d 925, 934 (9th Cir. 2008). At step one, the plaintiff bears the burden of showing that the challenged law "fall[s] within the purview of the Privileges and Immunities Clause." Friedman, 487 U.S. at 64 (quoting Camden, 465 U.S. at 221-22); see also Schoenefeld v. Schneiderman, 821 F.3d 273, 279 (2d Cir. 2016) (quoting Friedman, 487 U.S. at 64). If the plaintiff makes the required step-one showing, at step two the burden shifts to the state to show that the challenged law is "closely related to the advancement of a substantial state interest." Friedman, 487 U.S. at 65 (citing Sup. Ct. of N.H. v. Piper, 470 U.S. 274, 284 (1985)); see also Schoenefeld, 821 F.3d at 279 (quoting Friedman, 487 U.S. at 67).

         We address these two steps in turn.

         1. Purview of the Clause

         The "threshold matter" in any Privileges and Immunities Clause case is whether a challenged law "fall[s] within the purview" of the Clause. Camden, 465 U.S. at 218 (quoting Baldwin v. Mont. Fish & Game Comm'n, 436 U.S. 371, 388 (1978)). A plaintiff must show that the challenged law treats nonresidents differently from residents and impinges upon a "fundamental" privilege or immunity protected by the Clause. Camden, 465 U.S. at 218. Because California charges higher fees to nonresident commercial fishers, see Cal. Fish & Game Code §§ 7852, 7881, 8280.6, 8550.5, we easily conclude that Plaintiffs' interests are "facially burdened." McBurney v. Young, 133 S.Ct. 1709, 1715 (2013); see also Hillside Dairy Inc. v. Lyons, 539 U.S. 59, 66-67 (2003); Carlson v. State, 798 P.2d 1269, 1274 (Alaska 1990) ("[L]icense fees which discriminate against nonresidents are prima facie a violation of [the Privileges and Immunities Clause]."). Further, an unbroken line of authority characterizes commercial fishing as a "common calling" that is protected by the Privileges and Immunities Clause. See Mullaney v. Anderson, 342 U.S. 415, 417-19 (1952) (striking down Alaska's differentials for commercial fishing licenses as violating the Privileges and Immunities Clause); Toomer, 334 U.S. at 403 ("[C]ommercial shrimping in the marginal sea, like other common callings, is within the purview of the privileges and immunities clause."); Connecticut ex rel. Blumenthal v. Crotty, 346 F.3d 84, 96 (2d Cir. 2003) (holding that "commercial lobstering" falls within the purview of the Privileges and Immunities Clause); Tangier Sound Waterman's Ass'n v. Pruitt, 4 F.3d 264, 266 (4th Cir. 1993) (explaining that commercial fishing is a "protected privilege" because it implicates "'the right to earn a living'" (quoting Toomer, 344 U.S. at 403)); Carlson, 798 P.2d at 1274 ("Commercial fishing is a sufficiently important activity to come within the purview of the Privileges and Immunities Clause.").

         We therefore conclude that California's challenged fee differentials fall within the purview of the ...


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