Vizio, Inc. v. Klee

886 F.3d 249
Court of Appeals for the Second Circuit·Decided March 29, 2018·No. No. 17-227-cv; August Term 2017·Published·Cited by 14 cases

Opinion

RICHARD W. GOLDBERG, Judge:

*252Plaintiff-Appellant VIZIO, Inc. is a manufacturer of televisions sold nationwide, including in Connecticut. VIZIO challenges Connecticut's statute and regulations creating and implementing its electronic recycling program, Conn. Gen. Stat. §§ 22a-629 et seq. ; Conn. Agencies Regs. §§ 22a-630(d)-1, 22a-638-1 (collectively "Connecticut's E-Waste Law"), on the grounds that they effectively regulate interstate commerce in violation of the Commerce Clause, U.S. CONST . art. I, § 8, cl. 3.

Such a dormant Commerce Clause claim is analyzed through a "well-worn path," see N.Y. Pet Welfare Ass'n, Inc. v. City of New York , 850 F.3d 79, 89 (2d Cir. 2017), and because VIZIO has failed to articulate entitlement to relief under this familiar rubric, its claim must be dismissed.

BACKGROUND

On June 17, 2015, VIZIO initiated a lawsuit seeking to enjoin Connecticut from enforcing its e-waste law. On appeal, we review the constitutionality of that law under the Commerce Clause of the U.S. Constitution, art. I, § 8, cl. 3.

I. Connecticut's E-Waste Law

In July 2007, the Connecticut legislature passed "An Act Concerning the Collection and Recycling of Covered Electronic Devices," Public Act No. 07-189, codified at Conn. Gen. Stat. §§ 22a-629 et seq. The statute created a program under which certain manufacturers conducting business in the state would be required to register with Connecticut's Department of Energy and Environmental Protection ("DEEP") and pay a fee associated with the cost of recycling the products they manufacture. In general, the law was designed so that "each manufacturer [would] participate in the state-wide electronics recycling program ... to implement and finance the collection, transportation and recycling of covered electronic devices ...." Conn. Gen. Stat. § 22a-631(a). As a manufacturer of "non-[cathode ray tube]-based televisions," Conn. Gen. Stat. § 22a-629(5), for sale in Connecticut, Conn. Gen. Stat. § 22a-629(7), VIZIO must contribute to the state's television recycling program. See Conn. Gen. Stat. § 22a-631(a). VIZIO does not dispute that it is a covered manufacturer under the law, nor does it contest Connecticut's power to compel VIZIO to pay into the recycling program. VIZIO does, however, challenge the means by which Connecticut calculates its recycling fee.

The recycling program is operated by "covered electronic recyclers" ("CERs"), private entities who register with the state. See Conn. Gen. Stat. § 22a-629(6) ; see also Conn. Agencies Regs. § 22a-638-1(b). Those CERs collect all "covered electronic devices" for recycling and dispose of them. See generally Conn. Gen. Stat. § 22a-631. The manufacturers, in turn, pay their assigned fees directly to the CERs. Conn. Agencies Regs. § 22a-638-1(j).

The Connecticut legislature charged DEEP with enacting regulations "to establish annual registration and reasonable fees for administering the [recycling] program ...." Conn. Gen. Stat. § 22a-630(d). The law mandated that those fees would be "representative of the manufacturer's market share," calculated "based on available national market share data." Conn. Gen. Stat. § 22a-630(d) (emphasis added).

*253DEEP's regulations, which took effect in June 2010, determine each manufacturers' market share based on:

[I]nformation that approximates the total number of units sold by all manufacturers for the previous year and approximates the number of units sold that are attributable to each manufacturer. This determination shall be based upon nationally available market share data, including, but not limited to, the number of units shipped, retail sales data, consumer surveys, information provided by the manufacturers, or other nationally available market share data.

Conn. Agencies Regs. § 22a-638-1(g)(2). It is this national market share approach that VIZIO claims to be violative of the dormant Commerce Clause.

In its first amended complaint, VIZIO alleged that "the practical effect of the E-Waste Law is to directly regulate VIZIO's out-of-state sales and to control VIZIO's conduct outside of the state's boundaries." In short, VIZIO maintains that Connecticut's national market share approach unduly regulates interstate commerce by tying in-state fees to out-of-state transactions and by double charging those out-of-state sales.

VIZIO asserts a host of costs associated with Connecticut's E-Waste Law, each of which VIZIO contends influences its out-of-state pricing decisions by increasing the cost of doing business both in Connecticut and nationwide. The result, VIZIO argues, is a disproportionate share of the regulatory costs falling to producers like VIZIO who manufacture products that are sold in- and out-of-state. Additionally, VIZIO asserts that by considering a company's national sales, Connecticut double charges manufacturers for sales made outside the state. All of this, VIZIO claims, infringes on the interstate market for televisions "by reducing the narrow revenue margins that VIZIO can capitalize upon to price and compete."

According to VIZIO, the state's calculation of fees under Connecticut's E-Waste Law is problematic and VIZIO's specific circumstances highlight the law's burdensome effects. Because VIZIO's assigned national market share was higher than the company's actual share of the Connecticut market, VIZIO contends that the fees it paid were correspondingly disproportionate. Under the law, VIZIO claims to have been assessed market shares of 14.33%, 14.52%, and 16.088% in the years 2013 through 2015, respectively, and has spent over $2.5 million to comply with the law over those three years. These costs have accrued despite VIZIO's insistence that Connecticut's E-Waste Law principally funds the recycling of cathode ray tube televisions, a product VIZIO has never manufactured.

Thus, VIZIO asserts that it is required to pay an outsized recycling bill for televisions it did not produce, products which burden the recycling program exponentially more than its own.

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Vizio, Inc. v. Klee, 886 F.3d 249 (2d Cir. 2018).

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