National Association of Optometrists & Opticians Lenscrafters, Inc. v. Brown ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATIONAL ASSOCIATION OF 
OPTOMETRISTS & OPTICIANS
LENSCRAFTERS, INC.; EYE CARE
CENTERS OF AMERICA, INC.,
Plaintiffs-Appellees,
v. No. 07-15050
EDMUND G. BROWN, in his official
capacity as Attorney General of  D.C. No.
CV-02-01464-LKK
the State of California, OPINION
Defendant-Appellant,
and
CHARLENE ZETTEL, Director,
Department of Consumer Affairs,
Defendant.

Appeal from the United States District Court
for the Eastern District of California
Lawrence K. Karlton, District Judge, Presiding
Argued and Submitted
July 16, 2008—San Francisco, California
Filed May 28, 2009
Before: Before: Procter Hug, Jr., Richard A. Paez, and
Marsha S. Berzon, Circuit Judges.
Opinion by Judge Hug
6313
6316 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
COUNSEL
Jennifer L. Weck, Deputy Attorney General, San Diego, Cali-
fornia, for the appellant.
Lori A. Schechter, Morrison & Foerster, LLP, San Francisco,
California, for the appellees.
OPINION
HUG, Circuit Judge:
In this case we consider whether portions of certain Cali-
fornia statutes and regulations violate the dormant Commerce
Clause. The challenged laws prevent licensed opticians1 from
having specified business relationships with or offering ser-
1
Optical companies, such as LensCrafters, that fill prescriptions and
perform related services in selling eyewear, fit within the definition of
“dispensing opticians” under California law. See Cal. Bus. & Prof. Code
§ 2550. We will refer to “dispensing opticians” simply as “opticians” in
this opinion.
NAT’L ASS’N. OF OPTOMETRISTS v. BROWN 6317
vices in the same locations as licensed optometrists and oph-
thalmologists.
The National Association of Optometrists and Opticians,
LensCrafters, Inc., and Eye Care Centers of America, Inc.
challenged a portion of the California statutes and regulations
as violating the dormant Commerce Clause and moved for
summary judgment. California’s Attorney General and
Department of Consumer Affairs (collectively “the State”)
opposed the motion. The district court granted summary judg-
ment for the plaintiffs and entered the following declaratory
judgment and injunction:
It is hereby DECLARED that California Business
& Professions Code, §§ 655, 2556 and 3103, and
two companion regulations, 16 Cal. Code of Regs.,
Title 16 §§ 1399.251 and 1514, are unconstitutional
as they violate the dormant aspect of the Commerce
Clause of the United States Constitution, to the
extent that individually, or taken together, they pro-
hibit optical companies from offering prescription
eyewear at the same location in which eye examina-
tions are provided, and from advertising that eyew-
ear and eye examinations are available in the same
location.
Defendants are hereby permanently ENJOINED
and PROHIBITED from enforcing California Busi-
ness & Professions Code, §§ 655, 2556 and 3103,
and two companion regulations, 16 Cal. Code of
Regs., Title 16 §§ 1399.251 and 1514, either individ-
ually, or taken together, so as to prohibit optical
companies from offering prescription eyewear at the
same location in which eye examinations are pro-
vided, and from advertising that eyewear and eye
examinations are available in the same location.
6318 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
The defendants timely appealed. We have jurisdiction pur-
suant to 28 U.S.C. § 1291, and we reverse and remand for fur-
ther proceedings.
I.
Standing
As a preliminary matter, the State challenges the standing
of two of the appellees, Eye Care Centers of America and the
National Association of Optometrists and Opticians. It does
not, however, challenge LensCrafters’ standing. As a general
rule, in an injunctive case this court need not address standing
of each plaintiff if it concludes that one plaintiff has standing.
See Preminger v. Peake, 552 F.3d 757, 764 (9th Cir. 2008).
Because LensCrafters unquestionably has standing, we must
reach the question of whether the California laws violate the
dormant Commerce Clause. Thus, we do not address the chal-
lenge to the other appellees’ standing and refer to appellees
collectively as LensCrafters.
II.
Dormant Commerce Clause
[1] The Commerce Clause as written is an affirmative grant
of power to Congress to regulate interstate commerce, but
from it courts have long inferred a prohibition on state actions
limiting interstate commerce. South-Central Timber Dev., Inc.
v. Wunnicke, 467 U.S. 82, 87 (1984). This inference, com-
monly referred to as the dormant Commerce Clause, promotes
a national market and the free flow of commerce between the
states by preventing them from adopting economic protection-
ist policies. See Gen. Motors Corp. v. Tracy, 519 U.S. 278,
299-300 (1997); C & A Carbone, Inc. v. Town of Clarkstown,
511 U.S. 383, 390 (1994).
Under the dormant Commerce Clause, LensCrafters seeks
declaratory and injunctive relief, arguing that portions of the
NAT’L ASS’N. OF OPTOMETRISTS v. BROWN 6319
California statutes and regulations are protectionist measures
because they favor in-state optometrists and ophthalmologists
at the expense of opticians and optical companies head-
quartered out of state. The State responds that the California
laws do not violate the dormant Commerce Clause because
they are not impermissible economic protectionism; instead,
these laws prevent optometrists and ophthalmologists, as
health care providers, from being unduly influenced by com-
mercial interests, like LensCrafters.
The relevant statutes provide that licensed optometrists and
opticians cannot “have any membership, proprietary interest,
coownership, landlord-tenant relationship, or any profit-
sharing arrangement in any form, directly or indirectly” with
each other. Cal. Bus. & Prof. Code § 655(a)-(b). They further
provide that it is unlawful for an optician to advertise or fur-
nish the services of an optometrist or ophthalmologist,
employ an optometrist or ophthalmologist, maintain an
optometrist or ophthalmologist on or near the optician’s prem-
ises, or duplicate or change lenses without a prescription from
an optometrist or an ophthalmologist. Id. § 2556. An optician
cannot include in any advertisement relating to the sale of
eyewear words that indicate the practice of optometry, id.
§ 3103, and it is unprofessional conduct for an optician to
advertise the services of an optometrist or ophthalmologist.
Cal. Admin. Code § 1399.251. If an optometrist rents space
from a commercial concern, the rented space must be definite
and apart from space occupied by other occupants of the
premises, and the optometrist’s name or practice cannot be
linked in advertising or in any other manner with that of the
commercial concern. Id. § 1514.
Although the language of the statutes and regulations for-
bids several types of conduct, the district court noted that
LensCrafters only challenged the prohibition on co-location
and advertising of optometric services:
Plaintiffs challenge three sections of California’s
Business & Professions Code, §§ 655, 2556 and
6320 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
[3103], and two companion regulations, 16 Cal.
Code of Regs, Title 16 §§ 1399.251 and 1514, to the
extent these provisions taken together prohibit out-
of-state optical companies from offering prescription
eyewear at the same location in which eye examina-
tions are provided, and from advertising that eyew-
ear and eye examinations are available in the same
location.
Nat’l Ass’n of Optometrists & Opticians v. Lockyer, 463 F.
Supp. 2d 1116, 1118 (E.D. Cal. 2008). LensCrafters chal-
lenges the California laws primarily because optometrists and
ophthalmologists can set up a practice where patients can get
an eye examination and also buy prescription eyewear. Opti-
cians are unable to offer this convenience, which LensCrafters
describes as “one-stop shopping.”
LensCrafters contends one-stop shopping provides a signif-
icant business advantage in the sale of eyewear. It also asserts
that opticians are largely out-of-state businesses, whereas
optometrists and ophthalmologists are largely in-state individ-
uals or firms. Thus, LensCrafters argues the California laws
have a discriminatory effect on out-of-state businesses
because they prevent out-of-state opticians from offering one-
stop shopping while allowing in-state optometrists and oph-
thalmologists to do so.
[2] To address LensCrafters’ claim, we must first determine
whether the dormant Commerce Clause is applicable to this
case. The dormant Commerce Clause is implicated if state
laws regulate an activity that “has a substantial effect’ on
interstate commerce such that Congress could regulate the
activity.” Conservation Force, Inc. v. Manning, 301 F.3d 985,
993 (9th Cir. 2002). We conclude that the dormant Commerce
Clause is applicable to this case because the retail sale of
eyewear involves and affects interstate commerce such that
Congress could regulate in that area. See generally Lens-
NAT’L ASS’N. OF OPTOMETRISTS v. BROWN 6321
Crafters, Inc. v. Robinson, 403 F.3d 798, 802 (6th Cir. 2005).
Neither party challenges this premise.
Once the dormant Commerce Clause applies, the next step
is to determine whether the challenged California laws dis-
criminate against out-of-state entities. C & A Carbone, 511
U.S. at 390; Conservation Force, Inc., 301 F.3d at 995. Laws
that discriminate against out-of-state entities are subject to
strict scrutiny, while non-discriminatory laws only need to
satisfy a less rigorous balancing test to survive constitutional
scrutiny. C & A Carbone, Inc., 511 U.S. at 390, 392; Conser-
vation Force, Inc., 301 F.3d at 995.
A statutory scheme “can discriminate against out-of-state
interests in three different ways: (a) facially, (b) purposefully,
or (c) in practical effect.” LensCrafters, 403 F.3d at 802(internal quotation omitted). In this case both parties agree
that the California laws do not facially discriminate against
out-of-state entities, so we are left to consider whether the
portion of the challenged laws have a discriminatory purpose
or effect.
The district court discussed evidence of discriminatory pur-
pose in this case, but it did not rely on the laws’ purpose in
concluding that they are discriminatory. See Nat’l Ass’n of
Optometrists & Opticians, 463 F. Supp. 2d at 1130. The dis-
trict court stated:
[T]he evidence shows that Section 655, arguably the
key provision being challenged, was introduced in
the California Legislature, as the Act’s chief sponsor
put it, “on behalf of the California Optometric Asso-
ciation in an effort to protect California from some
of the problems . . . being experienced in eastern
states, where large business interests have com-
pletely taken over the optometric profession.”
Id. (omission in original). The court further stated, “While this
evidence does not shed further light on how the challenged
6322 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
restrictions operate in practice, it does buttress the conclusion
that the regulatory scheme is in fact an instance of economic
protectionism.” Id.
[3] We disagree with the district court that the statement of
the chief sponsor indicates that the regulatory scheme was
intended as economic protectionism favoring California busi-
nesses. Rather the statement is clear that the sponsor’s objec-
tive was to protect California’s optometric profession from
being taken over by large business interests, as had been
experienced in eastern states. This is in line with the wording
of the challenged statutes and regulations, which are directed
at preventing any sort of relationship of optometrists and oph-
thalmologists, who are health care providers, with the com-
mercial interests of opticians who do not have health care
responsibilities. Nothing in the statement suggests that the
purpose is to protect California optometrists and ophthalmolo-
gists from competition from out-of-state interests, as opposed
to commercial interests generally.
We next look to whether the California laws have a dis-
criminatory effect on interstate commerce and specifically on
out-of-state businesses like LensCrafters. To determine
whether the laws have a discriminatory effect it is necessary
to compare LensCrafters with a similarly situated in-state
entity. See Tracy, 519 U.S. at 299. The State contends there
is no discrimination between similarly situated entities, and
we agree. California treats out-of-state opticians, such as
LensCrafters, the same as in-state opticians. The statutes and
regulations apply to both. The challenged laws treat opticians
differently from optometrists and ophthalmologists, but such
distinctions are not prohibited, because opticians are not simi-
larly situated to optometrists and ophthalmologists.
Our conclusion that opticians are not similarly situated to
optometrists and ophthalmologists is guided by the Supreme
Court’s opinion in Tracy. In that case, the Supreme Court
considered a dormant Commerce Clause challenge to general
NAT’L ASS’N. OF OPTOMETRISTS v. BROWN 6323
sales and use taxes that Ohio imposed on natural gas pur-
chases whether in-state or out-of-state, but from which Ohio
exempted local public utility companies. The Court acknowl-
edged that local utility companies and independent out-of-
state natural gas marketers competed or wished to compete in
one of the same markets, but still concluded that they were
not similarly situated, and there was thus no discriminatory
effect. Id. at 302-10. In reaching this conclusion, the Court
paid attention to the local utility companies’ special role in
serving the residential market, remarking on “our traditional
recognition of the need to accommodate state health and
safety regulation in applying dormant Commerce Clause prin-
ciples,” and recognizing that Ohio was protecting the health
of its citizens by requiring local utility companies to ensure a
dependable supply of natural gas to residential consumers so
they would not be “frozen out of their houses in the cold
months.” Id. at 306. The Court then stated the Commerce
Clause was “never intended to cut the States off from legislat-
ing on all subjects relating to the health, life and safety of
their citizens, though the legislation might indirectly affect the
commerce of the country.” Id. (internal quotations omitted).
The Court reiterated that a bald assertion that laws are
directed toward legitimate health and safety concerns is not
enough to withstand a dormant Commerce Clause challenge,
but it made clear that we must give some deference to states’
decisions regarding health and safety. Id. at 307.
[4] Here through the challenged laws, California has sought
to protect optometrists and ophthalmologists as health care
professionals from being affected by subtle pressures from
commercial interests. The pressures of co-ownership and
profit sharing prohibited by the statutes are more obvious, but
potentially even a landlord-tenant relationship could under-
mine health care quality if the landlord required a certain level
of performance to maintain the lease. It is true that an optome-
trist or ophthalmologist would still be bound by professional
and ethical standards. However, it is the subtle pressure to
conform to commercial desires that the statutes seek to avoid.
6324 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
These subtle pressures would be difficult to regulate as viola-
tions of professional or ethical standards. Thus, the California
laws in this case are health regulations designed to prevent
health care providers from being unduly affected by commer-
cial interests. We must give deference to the State’s choice to
protect its citizens in this way.
The State offered evidence regarding the several ways in
which it distinguishes between opticians, optometrists, and oph-
thalmologists.2 These distinctions demonstrate in what
respects optometrists and ophthalmologists are health care
providers and opticians are commercial interests. Ophthalmol-
ogists require a medical degree. See Cal. Bus. & Prof. Code
§ 2089. Optometrists also have significant educational
requirements. They must complete certain undergraduate
requirements and graduate from a four-year, approved,
optometry school. See id. §§ 3041.3, 3046. They must pass
national and California exams and maintain continuing educa-
tion requirements. Id. §§ 3041.3, 3059; see also Cal. Admin.
Code §§ 1531, 1536. Both ophthalmologists and optometrists
have special ethical and professional responsibilities regulated
by the state and their respective professions, as the State’s
experts testified. The responsibilities carry over to all services
provided including the sale of eyewear.3
In contrast, although opticians also sell eyewear, they are
not bound by the same ethical and professional responsibili-
2
The Court has long upheld these distinctions, and corresponding limita-
tions on opticians’ abilities to compete with optometrists and ophthalmol-
ogists. See Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 486-87
(1955); Roschen v. Ward, 279 U.S. 337, 339 (1929) (rejecting a challenge
to a state’s legislation that required an optometrist or ophthalmologist to
be personally in charge of businesses that sold eyewear, concluding that
“there can be no doubt that the presence and superintendence of the spe-
cialist tend to diminish an evil”).
3
The State’s experts, doctors Gailmard and Thal, testified that sales of
optical goods are all part of providing patient medical care and such sales
are incidental to providing quality health care.
NAT’L ASS’N. OF OPTOMETRISTS v. BROWN 6325
ties. Unlike optometrists and ophthalmologists, opticians are
not health care providers, do not diagnose or treat diseases of
the eye, and may be owned and operated as commercial con-
cerns. Compare Cal. Bus. & Prof. Code §§ 3041-42 with
§§ 2550, 2556. As health care providers, optometrists and
ophthalmologists clearly have special responsibilities that
opticians do not, and as commercial concerns, opticians have
business structures available to them that optometrists and
ophthalmologists do not.
LensCrafters contends that these differences are irrelevant
because it competes in the same market for the sale of eye-
wear as optometrists and ophthalmologists. We disagree.
Although competing in different markets or offering different
products generally means that entities are not similarly situ-
ated, see Tracy, 519 U.S. at 299, competing in the same mar-
ket is not sufficient to conclude that entities are similarly
situated, as Tracy made clear.
Likewise in Exxon Corp. v. Governor of Maryland, 437
U.S. 117, 125-26 (1978), the Court chose not to treat out-of-
state gasoline refiners who also operated retail stations as sim-
ilarly situated to in-state gasoline retailers. Although the
Exxon Court did not articulate how it decided whether the
entities were similarly situated, the facts of that case make
clear that the out-of-state gasoline refiners wished to continue
offering the same products and competing in the same market
as the in-state retailers. 437 U.S. at 121-23. Nevertheless, in
Exxon, the Court distinguished between the entities based on
their business structures, holding that a state may prevent
businesses with certain structures or methods of operation
from participating in a retail market without violating the dor-
mant Commerce Clause. 437 U.S. at 127. Other courts have
applied the rule from Exxon to conclude that entities are not
similarly situated and so state laws are not discriminatory. See
Allstate Ins. Co. v. Abbott, 495 F.3d 151, 163-64 (5th Cir.
2007); LensCrafters, Inc., 403 F.3d at 804-05; Ford Motor
Co. v. Texas Dep’t of Transp., 264 F.3d 493, 501-02 (5th Cir.
6326 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
2001). Because states may legitimately distinguish between
business structures in a retail market, a business entity’s struc-
ture is a material characteristic for determining if entities are
similarly situated.
Therefore, we reject LensCrafters’ argument that competi-
tion in the same market renders it similarly situated to optom-
etrists and ophthalmologists. Through the challenged laws,
California has permissibly distinguished between types of
entities and services they may provide.
[5] Because they have different responsibilities, different
purposes, and different business structures, opticians are not
the same as optometrists or ophthalmologists. Although Lens-
Crafters competes in the same market as in-state optometrists
and ophthalmologists, LensCrafters is an optician. As such, it
is similarly situated to in-state opticians, not in-state optome-
trists or ophthalmologists. Because the California laws make
no geographical distinctions between similarly situated enti-
ties, they are not invalidated by the dormant Commerce
Clause.
[6] We note that despite LensCrafters’ claims that the abil-
ity to offer one-stop shopping affords a sales advantage to
optometrists and ophthalmologists, there are other sales
advantages enjoyed by LensCrafters by virtue of their size,
such as lower cost purchasing and the ability to offer a wider
selection of eyewear. It is important that LensCrafters is not
precluded from operating in California, which is the situation
for out-of-state entities in some dormant Commerce Clause
cases. LensCrafters is only deprived of one eyewear sales
method.
Our conclusion that the California laws are not discrimina-
tory is in accord with the decision of the Sixth Circuit in a vir-
tually identical situation involving LensCrafters’ dormant
Commerce Clause challenge to Tennessee statutes. Lens-
Crafters v. Robinson, 403 F.3d 798 (6th Cir. 2005). The court
NAT’L ASS’N. OF OPTOMETRISTS v. BROWN 6327
held that the challenged Tennessee statutes, similar to the con-
tested California laws, did not violate the dormant Commerce
Clause. It concluded that dispensing optometrists and optical
stores are not similarly situated. The court stated, “Unlike
retail optical stores, licensed optometrists are healthcare pro-
viders and, as such, have unique responsibilities and obliga-
tions to their patients that are not shared by optometric
stores.” Id. at 804. The court also pointed out that the chal-
lenged statutes did not discriminate between in-state and out-
of-state optical companies wishing to sell eyewear or between
in-state and out-of-state optometrists as both in-state and out-
of-state entities were bound by the same statutes. Id. at 805.4
[7] Our determination that the challenged laws are not dis-
criminatory does not end our analysis. Even though not dis-
criminatory, the laws may still be invalidated if the burden
they place on interstate commerce outweighs their benefits.
This balancing test was set forth in Pike v. Bruce Church,
Inc., in which the Supreme Court stated, “Where the statute
regulates even-handedly to effectuate a legitimate local public
interest, and its effects on interstate commerce are only inci-
dental, it will be upheld unless the burden imposed on such
commerce is clearly excessive in relation to the putative local
4
The parties disagree about the implications of the California Supreme
Court’s decision in People v. Cole, 135 P.3d 669 (Cal. 2006), specifically
with regard to whether it is possible for an interstate optical chain like
LensCrafters to provide “one-stop shopping” in California by forming a
relationship with a health care service plan (“HMO”) licensed under the
Knox-Keene Act of 1975, Cal. Health and Safety Code §§ 1340, et seq.
The California Supreme Court in Cole held that the Knox-Keene Act does
not exempt eyewear stores from complying with Cal. Bus. & Prof. Code
§§ 655 and 2556, Cole, 135 P.3d at 671, but it remains unclear whether
the California statutes allow for some sort of business relationship between
a company like LensCrafters and a Knox-Keene HMO. The district court
assumed that, after Cole, the statutes did not allow for any such arrange-
ments. See Nat’l Ass’n of Optometrists & Opticians, 463 F. Supp. 2d at
1120. It is not clear to us that this is so, but even assuming it is, that fact
would not change our conclusion that the California statutes have no dis-
criminatory effect.
6328 NAT’L ASS’N. OF OPTOMETRISTS v. BROWN
benefits.” 397 U.S. 137, 142 (1970). LensCrafters bears the
burden of proof in establishing the excessive burden in rela-
tion to the local benefits. In this case, the district court did not
apply the Pike balancing test because it concluded the laws
had a discriminatory effect on LensCrafters. Accordingly, we
remand to the district court to apply the Pike balancing test in
the first instance.
CONCLUSION
[8] The district court erred in concluding that the California
statutes discriminate against out-of-state entities in violation
of the dormant Commerce Clause. We reverse and remand to
the district court to apply the Pike balancing test.
REVERSED AND REMANDED.