Bottle Bill Counter Claim

8/14/2019 Bottle Bill Counter Claim

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK---------------------------------------------------------------xINTERNATIONAL BOTTLED WATER :ASSOCIATION; NESTL WATERS NORTH :

AMERICA, INC; and POLAR CORP. d/b/a :POLAR BEVERAGES, ::

Plaintiffs, ::

- against - : 09-CV-4672 (DAB):

DAVID A. PATERSON, in his official capacity as :Governor of the State of New York, et al., :

:Defendants. :

---------------------------------------------------------------x

DEFENDANTS MEMORANDUM OF LAW IN SUPPORT OF THEIR

MOTION TO MODIFY THE PRELIMINARY INJUNCTION

ANDREW M. CUOMOAttorney General of the

State of New YorkAttorney for Defendants120 Broadway, 24th floorNew York, New York 10271(212) 416-8618/6536

JUNE DUFFYFREDERICK H. WENAssistant Attorneys General

of Counsel

June 9, 2009


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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF FACTS AND PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Prior Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5The Amendments to the Bottle Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

LEGAL STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

POINT IJUSTICE REQUIRES THAT THE PRELIMINARY INJUNCTION ISSUED ONMAY 29, 2009, BE MODIFIED TO ENJOIN ONLY THE PROVISIONS OF THEBOTTLE BILL AMENDMENTS CHALLENGED BY PLAINTIFFS AND FOUNDBY THE COURT TO BE UNCONSTITUTIONAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

A. The Language of the Preliminary Injunction Does Not Accurately State TheCourts Ruling From the Bench and Should Be Modified . . . . . . . . . . . . . . . . . . 14

B. The Order Should Be Modified As It Is Internally Inconsistent and Ambiguousand Therefore Violates Rule 65(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

C. In Any Event, Only the Provision of the Bottle Bill Amendments Found to beInvalid by the Court Should Be Severed, With the Remaining UnchallengedProvisions Left Intact and Enforceable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

POINT IITHE AMOUNT OF THE BOND POSTED BY PLAINTIFFS MUST BEINCREASED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24


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TABLE OF AUTHORITIES

FEDERAL CASES Page

Alabama v. U.S. Army Corps of Engineers,

424 F.3d 1117 (11th Cir. 2005), cert. denied 547 U.S. 1192 (2006) . . . . . . . . . . . . . . . . 13

Alaska Airlines, Inc. v. Brock,480 U.S. 678 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-21

Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,910 F.2d 1049 (2d Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Building and Construction Trades Council v. Downtown Development, Inc.,448 F.3d 138 (2d Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Corning Inc. v. Pic Vue Electrics, Ltd.,365 F.3d 156 (2d Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

EEOC v. CBS, Inc.,743 F.2d 969 (2d Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

EEOC v. Westinghouse Electric Corp.,765 F.2d 389 (3d Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Fair Housing in Huntington Committee v. Town of Huntington,316 F.3d 357 (2d Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Global Switching Inc. v. Kasper,2006 U.S. Dist. LEXIS 44450 (E.D.N.Y. June 29, 2006) . . . . . . . . . . . . . . . . . . . . . . . . 11

Goldic Electrical Inc. v. Loto Corp. USA,27 Fed. Appx. 71, 2001 U.S. App. LEXIS 25388 (2d Cir. 2001) (summary order) . . . . 17

Grace v. Rosenstock,228 F.3d 40 (2d Cir. 2000), cert. denied, 532 U.S. 923 (2001) . . . . . . . . . . . . . . . . . . . . 12

Gunn v. University Committee to End War,399 U.S. 383 (1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Ibeto Petrochemical Industrial Ltd. v. M/T Beffen,475 F.3d 56 (2d Cir. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16


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Ideal Toy Corp. v. Sayco Doll Corp.,302 F.2d 623 (2d Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

In re Worldcom, Inc. Sec. Litigation,No. 02 Civ. 3288, 2007 U.S. Dist. LEXIS 76272 (S.D.N.Y. Oct. 16, 2007) . . . . . . . . . . 14

Inverness Corp. v. Whitehall Laboratoriess,819 F.2d 48 (2d Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Joseph Scott Co. v. Scott Swimming Pools, Inc.,764 F.2d 62 (2d Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Mead Johnson & Co. v. Abbott Laboratories,201 F.3d 883 (7th Cir.), cert. denied 531 U.S. 917 (2000) . . . . . . . . . . . . . . . . . . . . . . . 22

Metropolitan Opera Association, Inc. v. Local 100, Hotel Employees and Restaurant

Employees International Union,239 F.3d 172 (2d Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Moore v. Consolidated Edison Co. of N.Y. Inc.,409 F.3d 506 (2d Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

National Advertising Co. v. Babylon,900 F.2d 551 (2d Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

New York v. Oneida Indian Nation,78 F. Supp. 2d 49 (N.D.N.Y 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-21

New York v. Shinnecock Indian Nation,560 F. Supp. 2d 186 (E.D.N.Y. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 15-16

Nichols Media Group, LLC v. Town of Babylon,365 F. Supp. 2d 295 (E.D.N.Y. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Okaw Drainage District of Champaign and Douglas County v. National Distillers andChemical Corp., 882 F.2d 1241 (7th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Rosen v. Siegel,106 F.3d 28 (2d Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-14

Russell v. Farley,105 U.S. 433 (1882) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22


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S. C. Johnson & Son, Inc. v. Clorox Co.,241 F.3d 232 (2d Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Starter Corp. v. Converse, Inc.,170 F.3d 286 (2d Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Sunward Electrics, Inc. v. McDonald,362 F.3d 17 (2d Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Weight Watchers International v. Luigino's, Inc.,423 F.3d 137 (2d Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-12

FEDERAL STATUTES

42 U.S.C. 1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

FEDERAL RULES OF CIVIL PROCEDURE

Rule 52(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Rule 54(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Rule 60(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Rule 65(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2, 13, 15, 17

STATE STATUTES

New York Environmental Conservation Law (ECL):ECL 27-1005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ECL 27-1012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 7-8ECL 27-1012.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 15, 17, 19-21, 24ECL 27-1018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6ECL 27-1019 (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 21Article 27, Title 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Part SS of Chapter 59 of the Laws of 2009, 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 7Returnable Container Act (RCA) Chapter 200 . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5, 7-8

STATE RULES AND REGULATIONS

6 NYCRR Part 367 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

OTHER AUTHORITIES

WRIGHT,MILLER&KANE, Federal Practice and Procedure, Civil 2d, 2947 . . . . . . . . . . . . . . 13 2955 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17


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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK---------------------------------------------------------------xINTERNATIONAL BOTTLED WATER :ASSOCIATION; NESTL WATERS NORTH : DEFENDANTS

AMERICA, INC; and POLAR CORP. d/b/a : MEMORANDUM OF LAWPOLAR BEVERAGES, : IN SUPPORT OF THEIR: MOTION TO MODIFY

Plaintiffs, : THE PRELIMINARY: INJUNCTION

- against - :: 09-CV-4672 (DAB)

DAVID A. PATERSON, in his official capacity as :Governor of the State of New York, et al., :

:Defendants. :

---------------------------------------------------------------x

PRELIMINARY STATEMENT

Defendants, David A. Paterson, Governor of the State of New York; Andrew M. Cuomo,

Attorney General of the State of New York; Alexander B. Grannis, Commissioner of the New York

State Department of Environmental Conservation; Patrick Hooker, Commissioner of the New York

State Department of Agriculture and Markets; and Robert L. Megna, Commissioner of the New York

State Department of Taxation and Finance (collectively defendants), respectfully submit this

memorandum of law in support of their motion to modify the preliminary injunction, issued May 29,

2009, as it violates FED.R.CIV.P. 65(d) because it is overbroad and ambiguous, and to increase the

amount of the bond posted by plaintiffs.

Recent statutory amendments signed on April 7, 2009, expanded the scope of the current New

York State Returnable Container Act (RCA), which already required retailers, distributors,

redemption centers, and bottlers to collect and redeem deposits on several beverage containers such

as aluminum cans, glass, and plastic bottles for soft drinks, mineral and soda water, and beer. N.Y.

ENVTL. CONSERV. LAW 27-1003(1)-(2) (1982). Most of the RCA (the Bottle Bill)


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Amendments, which should have gone into effect on June 1, 2009, expanded New York States

recycling program to require retailers, distributors, redemption centers, and bottlers to start collecting

and redeeming bottle deposits on all non-carbonated bottled water sold in New York, required

beverage companies to return 80 percent of the unclaimed deposits to the State General Fund, and

increased the handling fee from 2 cents to 3.5 cents a container for the redemption of containers.

Plaintiffs challenged these provisions as applied to water bottles only, seeking a preliminary

injunction. In granting the preliminary injunction on limited grounds, the Court nonetheless enjoined

the Bottle Bill Amendments in their entirety until April 1, 2010.

Defendants respectfully contend that the language of the preliminary injunction far exceeds

the parameters of this litigation and the relief sought by plaintiffs, does not faithfully reflect the

findings of fact and conclusions of law stated by Judge Griesa in his decision from the bench on May

27, 2009, after oral argument, and lacks the specificity required by FED. R. CIV. P. 65(d). The

language of the order, proposed by plaintiffs and signed by the Court, enjoins defendants from

implementing and enforcing any and all other amendments to the Bottle Bill signed into law on April

7, 2009, until April 1, 2010 (Doc. #30; Decl. of Frederick H. Wen (Wen Decl.), dated June 9,

2009, Ex. D), while plaintiffs, both in their complaint and at oral argument, challenged only three

discrete aspects of the bill: (1) the requirement that each container have a New York-exclusive

Universal Product Code; (2) the June 1, 2009 effective date as providing too little time for

compliance; and (3) the exclusion of water with sugar from the Bottle Bill Amendments. To the

extent that the Court found one section of the Bottle Bill Amendments unconstitutional as violative

of the Commerce Clause and another as provision as setting an impossible deadline for compliance

with provisions related to bottled water, such provision are severable and the Court need not have


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enjoined the entirety of the Amendments with such devastating effect on the environment and the

public fisc. Further, plaintiffs conceded at oral argument that they could comply with the Bottle Bill

Amendments by October 1, 2009, yet Judge Griesa endorsed their extension of the preliminary

injunction until April 1, 2010.

The expansive language of the relief granted enjoining defendants from implementing and

enforcing any and all other amendments to the Bottle Bill signed into law on April 7, 2009, until April

1, 2010 failed to give sufficient weight to balancing the equities and has wrought harm to the public

health of New Yorks citizens and to the States public fisc as well as to small businesses which

support New Yorks recycling process. By enjoining the amendments to the Bottle Bill in their

entirety for ten months, the Court ignored the reasons for its passage, namely that: (1) the litter of

beverage containers, including a proliferating number of water bottles, not covered previously by the

Bottle Bill, is a growing problem of State concern and a direct threat to the health and safety of New

Yorks citizens; (2) litter accumulation must be disposed of at increasing public expense; and (3) the

uninhibited discard of beverage containers constitutes a waste of both mineral and energy resource.

(Wen Decl., Ex. A, 1-2).

Further, the Bottle Bill Amendments also granted a needed increase in the handling fee from

2 cents to 3.5 cents per container to redemption centers and other businesses redeeming bottles, the

first increase in eleven years (id., 4, 27-1007(6)), and protected beverage purchasers by mandating

that a New York Bottle Bill of Rights be posted at the point of sale. Id., 4, 27-1007(2).

Most importantly, the Bottle Bill Amendments provided that from June 1, 2009 forward, 80

percent of all unredeemed deposits would be remitted to the State with 20 percent remaining with the

manufacturers. The Amendments set up a protocol for accomplishing this goal through the


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registration (beginning on April 1, 2009) of deposit initiators with the New York State Department

of Taxation & Finance and their issuance of quarterly reports and the transfer of funds electronically.

N.Y.ENVTL.CONSERV.LAW 27-1012.4. It is estimated that the State fisc would be increased

through this amendment by $153 million dollars in the 2009 fiscal year which ends March 31, 2010.

Unredeemed deposits from only previously-covered beverages (beer, soda, some wine) would bring

in $86 million from June 1, 2009, through March 31, 2010. (Wen Decl., Ex. E, Decl. of Todd

Scheuermann, Chief Budget Examiner in the New York Division of Budget, dated June 5, 2009, at

2-3). In other words, New York State is losing $235,000 per day ($86 million/365) because this

provision unchallenged by the plaintiffs is now enjoined until April 1, 2010.

The language of the preliminary injunction suspends implementation of all these provisions

even though none were challenged in this litigation by the plaintiffs. For the reasons stated below,

justice requires that the language of the preliminary injunction be modified and narrowed to reflect

the Courts actual and limited findings of fact and conclusions of law which prohibited the

requirement for a New York-exclusive Universal Product Code and found June 1, 2009, to be too

short of a deadline for compliance by the water bottlers with provisions related to bottled water.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

The Court is respectfully referred to the declarations submitted herewith in support of

defendants motion to modify the preliminary injunction for a fuller explanation of the amendments

to the Bottle Bill and how they are designed to work, which will be briefly summarized here:

Declaration of Cristin M. Clarke, Senior Attorney in the Office of Counsel in the New York State

Department of Environmental Conversation (DEC), dated June 9, 2009, (Clarke Decl.) (Ex. E);

Declaration of Diane ODonnell, Tax Processing Administrator II in the Returns, Deposit,


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Overpayments and Control Bureau of the New York State Department of Taxation and Finance,

undated (ODonnell Decl.) (Ex. F); Declaration of Todd Scheuermann, Chief Budget Examiner in

the New York Division of Budget, dated June 5, 2009 (Scheuermann Decl.) (Ex. G). The Court

is further referred to the Declaration of Kenneth A. Rosenblum, Counsel to the Empire State Beer

Distributors Association (Empire), dated June 5, 2009 (Rosenblum Decl.) (Ex. H); the

Declaration of Sheila Rivers, Chairperson of the Bottle and Can Redemption Association

(BACRA), dated June 5, 2009 (Rivers Decl.) (Ex. I), and the Declaration of Carlos D. Nazario,

former President of the Empire State Beer Distributors Association, and current President and Chief

Executive Officer of Neighborhood Redemption Center, dated June 9, 2009 (Nazario Decl.) (Ex.

J), which detail the devastating financial impact of the enjoining of the increased fees to redemption

centers and other business handling the redemption of containers.

The Bottle Bill and Its Amendments

The RCA was originally enacted on June 15, 1982, by Chapter 200, Laws of 1982 and became

effective July 1, 1983. The statutory authority is Article 27, Title 10 of the New York Environmental

Conservation Law (ECL), sections 27-1001 to 27-1019, and the implementing regulations are at

6 NYCRR Part 367. The RCA was amended by Part SS of Chapter 59 of the laws of 2009

(hereinafter Bottle Bill Amendments or Amendments), which were signed into law by Governor

Paterson on April 7, 2009, and amend Title 10 of Article 27 of the ECL. (Clarke Decl., 4-5).

The RCA already required retailers, distributors, redemption centers, and bottlers to collect

and redeem deposits on several beverage containers such as aluminum cans, glass, and plastic bottles

for soft drinks, mineral and soda water, and beer. The Bottle Bill Amendments, would, inter alia,

expand the Bottle Bill to require retailers, distributors, redemption centers, and bottlers to start


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collecting and redeeming bottle deposits on all non-carbonated bottled water sold in New York, and

require beverage companies to return 80 percent of the unclaimed deposits to the State General Fund.

Further, the Bottle Bill would increase the handling charge from 2 cents a container to 3.5 cents, the

first increase in eleven years.

Given the short notice afforded defendants by plaintiffs order to show cause, the swift

scheduling of oral argument and the limited nature of the relief sought by plaintiffs, certain facts,

essential to defendants motion for modification, were not before the Court when it granted the

preliminary injunction.

Significantly, when the amendments were signed into law on April 7, 2009, certain provisions

took effect immediately:

a. Section 1: addresses legislative findings and makes conforming changes tolegislative intent;

b. Section 10: authorizes DEC to promulgate rules and regulations necessary forimplementation;

c. Section 12: requires that DEC establish a public education program to

disseminate information regarding implementation of this title;

d. Section 13: adds a new ECL 27-1018 to establish a beverage containerassistance program;

e. Section 14: amends section 261 of the New York State EconomicDevelopment Law to expand waste prevention eligibility to include the costsof reverse vending machines and acquisition of real property for beveragecontainer collection, sorting, and packaging.

f. Section 15: amends section 54-0701 of the Environmental Conservation lawso that the term cost also includes beverage container assistance programgrants to municipalities ad not-for-profit organizations pursuant to ECLsection 27-1018; and amends the definition of recycling project.

g. Section 16: sets forth the effective dates of each section in the amendments


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The definition of water included any flavored water or nutritionally enhanced water,1

but not any beverage identified as a type of water to which a sugar has been added. (Ex. A, 2, 27-1003(1)).

For a chart setting forth each provision of the Amendments with its respective effective2

dates, purpose, and impact, defendants refer the Court to the chart annexed to the ClarkeDeclaration as Exhibit A.

7

in Part SS of Chapter 59 of the Laws of 2009.

(Clarke Decl., 14).

Other amendments took retroactive effect April 1, 2009:

Section 2 and 3: Sections Two and Three make changes to the definitions in section 27-1003

of the RCA. Specifically, section Two adds the term water to the definitions of beverages and1

amends the definition of beverage container. Section 3 adds and defines the terms bottler,

deposit initiator, reverse vending machine, and universal product code. Section 3 also amends

the definitions of distributor and redemption center. (Clarke Decl., 16-17).

Section 8: Section Eight of the Amendments also took effect on April 1, 2009, except that

the requirements to make deposits, file reports, and make withdrawals under the new ECL section 27-

1012, with respect to containers defined as beverage containers prior to April 1, 2009 (carbonated soft

drinks, mineral water, soda water, beer, other malt beverages and wine products) was to first apply

to the period beginning on April 15, 2009, and ending May 31, 2009. (Clarke Decl., 18).

Other amendments were to take effect June 1, 2009, only three of which affect bottlers. Id.,

20-23. Specifically, with respect to all other beverage containers (water beverages), the2

requirements to make deposits, file reports, and make withdrawals under the new ECL section 27-

1012 (as added by section 8 of the 2009 Bottle Bill Amendments) would first apply to the period

beginning June 1, 2009 and ending August 31, 2009. Also, water beverages would not be required


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This provision has been enjoined by the May 29, 2009 Order and is not challenged by3

defendants motion for modification.

8

to have a refund value as required under ECL section 27-1005, as added by section 4 of the

amendments, until June 1, 2009. (Clarke Decl., 21).

Additionally, the requirements of subsection 12 of section 27-1012, did not take effect until

June 1, 2009. Beginning June 1, 2009, deposit initiators were required to register the container labels

of a beverage offered for sale in New York State on which they initiate a deposit. Those labels were

required to have a universal product code (UPC), and such UPC was required to be New York-

specific. Id., 22.3

The program by which the State would recapture deposits representing unredeemed beverage

containers, as provided by the amendments, was set up by the Department of Taxation and Finance.

(ODonnell Decl., passim). Registration for the program for deposit initiators (sellers of carbonated

soft drinks, beer, malt beverages and certain wine products) subject to the RCA prior to April 1, 2009,

took place from April 1, 2009 through June 1, 2009. Id., 7. The first payments to the State from

these deposit initiators must be made by June 22, 2009. Id., 8. The New York State Division of

the Budget estimates that 80 percent of all unredeemed deposits would bring $115 million dollars into

the General Fund for fiscal year 2009-2010 (April 1, 2009 - March 31, 2010). (Scheuermann Decl.,

4, 9). Eighty-six million dollars would be collected if the State received 80 percent of the deposits

from previously covered containers while $29 million would be collected from water bottlers, now

lost if the expansion of coverage to water bottlers is delayed until April 10, 2010. Id., 10-11.

For the impact of the delay in receipt of the 1.5-cent increase in the handling fee for returned

containers from 2 cents to 3.5 cents, defendants respectfully refer this Court to the Rosenblum,


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Rivers, and Nazario Declarations, passim. (Wen Decl., Exs. H-J). All of those declarations stress the

financial impact of the loss of the increase for more than 300 redemption centers, including beverage

centers holding C licenses issued by the New York State Liquor Authority. Without modification

of the preliminary injunction to allow the increase in the handling fee, the redemption centers may

go out of business and jobs will be lost. Id., Exs. I, 23; Ex. J, 9-10.

Prior Proceedings

Plaintiffs, International Bottled Water Association (IBWA), a worldwide bottled-water trade

association, and Nestl Waters North America, Inc. (Nestl), and Polar Corp., d/b/a Polar Beverages

(Polar), two corporate bottled-water producers (collectively plaintiffs), bring this action against

five New York State officials in their official capacities. The Complaint contains seven causes of

action under 42 U.S.C 1983, challenging the constitutionality of some of the Bottle Bill

Amendments, asserting that they violate the Commerce Clause, the Equal Protection, and Substantive

Due Process. (Doc. #1; Ex. B, Compl. at 7-13). Plaintiffs sought to enjoin the defendants from

implementing and enforcing only certain provisions of these Bottle Bill Amendments, challenging

the provisions that require all bottles sold in New York to have a New York-exclusive Universal

Product Code, that provide an exception for bottles that contain sugar (Sugar Water Exception),

and that set the effective date of June 1, 2009 for compliance by water bottlers. (Doc. #6, Pls. Mem.

of Law in Support of Mot. for a Prelim. Inj. at 1-2).

At oral argument on May 27, 2009, plaintiffs reiterated these claims. Plaintiffs counsel stated

that they were objecting to: number one, regulating our actions outside of New York; and number

two, imposing those requirement with only seven weeks lead time; and number three, the sugar water

exception. (Doc. #29; Wen Decl., Ex. C, p. 30 at lines 9-12). In short, these were the only issues


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Defendants do not challenge that ruling which is set forth in the Order at paragraph 1.4

(Ex. D at 1).

10

considered by the Court before it granted the preliminary injunction from the bench.

Plaintiffs counsel further stressed the importance of the concerns of the water bottlers and

the difficulty of compliance in a short time because water bottles had never been covered by the

Bottled Bill previously (Wen Decl., Ex. C, p. 5, 3-5; p. 6, 13-14; p. 7, 12-13), in contrast to beer and

soda companies who had been subject to the container law since 1982. (Wen Decl., Ex. C, p. 5, 15-

26; p. 6, 16-23; p. 7, 12-22). Plaintiffs made emphatically clear that they were not challenging all

aspects of the Bottle Bill, including the new 80 percent/20 percent split which remitted to the State

80 percent of the deposits never presented for redemption, 100 percent of which previously had

provided a windfall to the manufacturers. (Wen Decl., Ex. C, p. 11, 17-23; p. 12, 19-23; p. 13, 1-11).

Further, when questioned by the Court about how much time was needed for compliance with the

Bottle Bill, plaintiffs counsel responded, [W]e have submitted an affidavit indicating a bare

minimum of October 1st. Id. at p. 30, 21-23.

At the end of the argument, the Court granted a preliminary injunction, placing his findings

on the record. The Court enjoined the requirement for a New York-exclusive Universal Product

Code, holding that the provision is a violation of the commerce clause. (Wen Decl., Ex. C, p. 55,4

4-7). The Court further found June 1 an impossible deadline (id. at 55, 23), inviting a proposed

order providing for a more reasonable deadline. Id. at p. 56, 1-2.

Plaintiffs proposed and the Court signed, over defendants objections, an Order greatly

expanding the Courts ruling from the bench in paragraphs 2 and 3. Paragraph 2 reads:

(2) Defendants are enjoined from implementingand enforcing any and all other amendments to the Bottle Bill


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signed into law on April 7, 2009, until April 1, 2010, to allowpersons subject to the amendments sufficient time to complywith the laws requirement.

(Wen Decl., Ex. D).

With respect to the Sugar Water Exception, the Court crossed out the paragraph enjoining that

provision, and initialed it because the Court had made no mention of that exception in its ruling from

the bench. (Wen Decl., Ex. C, pp. 54-56; Ex. D at 2).

The defendants now move to modify the language of the preliminary injunction so that only

provisions of the Amendments which affect water bottlers are enjoined as to the plaintiffs ( 4, 8,

27-1012.12), that all other amendments may be implemented and enforced, and that the date for

compliance by water bottlers be set for October 1, 2009, instead of April 1, 2010.

LEGAL STANDARDS

While an interpretation of a preliminary injunction does not change the status of the parties,

a modification alters the legal relationship between the parties, or substantially changes the terms

and force of the injunction. Weight Watchers Intl v. Luiginos, Inc., 423 F.3d 137, 142 (2d Cir.

2005). The decision whether to modify a preliminary injunction involves an exercise of the same

discretion that a court employs in an initial decision to grant or deny a preliminary injunction.

Global Switching Inc. v. Kasper, 2006 U.S. Dist. LEXIS 44450, at *33 (E.D.N.Y. June 29, 2006)

(quoting Weight Watchers Intl, Inc., 423 F. 3d at 141). [A] preliminary injunction is a specific

equitable remedy and thus, must be framed in such a way as to strike a delicate balance between

competing interests. By necessity, the scope of the injunction must be drawn by reference to the facts

of the individual case, reflecting a careful balancing of the equities. Sunward Elecs., Inc. v.

McDonald, 362 F.3d 17, 26 (2d Cir. 2004) (quoting Joseph Scott Co. v. Scott Swimming Pools, Inc.,


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12

764 F.2d 62, 67 (2d Cir. 1985)) (citation omitted) (upholding the issuance of the preliminary

injunction, but remanding for the district court to conduct a factual inquiry into the scope of the

injunctive order and modify it if necessary.).

An interlocutory order, such as the one here, is subject to revision at any time before the entry

of [final] judgment. FED.R.CIV.P. 54(b); Grace v. Rosenstock, 228 F.3d 40, 51 (2d Cir. 2000),

cert. denied, 532 U.S. 923 (2001) (All interlocutory orders remain subject to modification or

adjustment prior to the entry of a final judgment adjudicating the claims to which they pertain.).

[I]nterlocutory judgments are left subject to the complete power of the Court rendering them to

afford such relief from them as justice requires. FED.R.CIV.P. 60(b) Advisory Committee notes;

see also Ideal Toy Corp. v. Sayco Doll Corp., 302 F.2d 623, 625 (2d Cir. 1963) ([A]bsent an appeal,

a district court has complete power over its interlocutory orders. . . . And, absent an appeal, it lay

within the discretion of the district court to consider newly presented evidence. . . .) (citations

omitted). The defendants here seek a modification to substantially change[] the terms and force of

the injunction. Weight Watchers Intl, 423 F.3d at 142.

ARGUMENT

POINT I

JUSTICE REQUIRES THAT THE PRELIMINARY

INJUNCTION ISSUED ON MAY 29, 2009, BE MODIFIED TO

ENJOIN ONLY THE PROVISIONS OF THE BOTTLE BILL

AMENDMENTS CHALLENGED BY PLAINTIFFS AND

FOUND BY THE COURT TO BE UNCONSTITUTIONAL.

A preliminary injunction is an extraordinary and drastic remedy, Moore v. Consol. Edison

Co. of N.Y. Inc., 409 F.3d 506, 510 (2d Cir. 2005) (citations omitted), whose purpose is to protect

the plaintiffs from irreparable harm and to preserve the Courts power to render a meaningful decision


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after trial on the merits. In issuing such an order before the entire matter has been fully and fairly

heard, great care must be taken to assure that the power of a court to require or to deter action does

not result in unwarranted harm to the defendant or the public. Alabama v. U.S. Army Corps of

Engineers, 424 F.3d 1117, 1128 (11th Cir. 2005), cert. denied 547 U.S. 1192 (2006) (quoting

WRIGHT,MILLER&KANE, Federal Practice and Procedure, Civil 2d 2947). Further, an injunction,

preliminary or not, must be based on a Courts finding of fact and conclusions of law which

constitute the grounds for its action. FED.R.CIV.P. 52(a); Rosen v. Siegel, 106 F.3d 28, 32 (2d Cir.

1997). Such directive encourages the trial judge to ascertain the facts with due care and to render

a decision in accord with the evidence and the law. Inverness Corp. v. Whitehall Labs, 819 F.2d 48,

50 (2d Cir. 1987) (per curiam); see also Fair Hous. in Huntington Comm. v. Town of Huntington, 316

F.3d 357, 364 (2d Cir. 2003).

Rule 65 of the Federal Rules of Civil Procedure sets forth the Contents and Scope of Every

Injunction and Restraining Order. Specifically, the Rule states that every order granting an

injunction . . . must . . . state the reasons why it issued[;] . . . state its terms specifically; and . . .

describe in reasonable detail and not by referring to the complaint or other document the act or

acts restrained or required. FED.R.CIV.P. 65(d). To comply with the specificity and clarity

requirements [of Rule 65(d)], an injunction must be specific and definite enough to apprise those

within its scope of the conduct that is being proscribed. New York v. Shinnecock Indian Nation,

560 F. Supp. 2d 186, 189 (E.D.N.Y. 2008) (quoting S. C. Johnson & Son, Inc. v. Clorox Co., 241

F.3d 232, 240-41 (2d Cir. 2001)) (internal citation and quotation marks omitted). This rule against

broad, vague injunctions is designed to prevent uncertainty and confusion on the part of those to

whom the injunction is directed, and to be sure that the appellate court knows precisely what it is


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reviewing. Id. (quoting Rosen, 106 F.3d at 32) (citation and quotation marks omitted); see also In

re Worldcom, Inc. Sec. Litig, 2007 U.S. Dist. LEXIS 76272, at *11 (S.D.N.Y. Oct. 16, 2007) (Rule

65 is concerned with vagueness insofar as a vague injunction poses the threat of a contempt citation

for violation of an order so vague that an enjoined party may unwittingly and unintentionally

transcend its bounds.) (internal citation and quotation marks omitted).

A. The Language of the Preliminary Injunction Does Not Accurately State the Courts

Ruling From the Bench and Should Be Modified

The language of the preliminary injunction order violates all of these precepts. Here, the

Court specifically found that:

the new law includes bottled water, where the old law did not (Wen Decl., Ex. C atp. 53);

one plaintiff was a trade organization relating to bottled water and another, a maker

and distributor of bottled water, namely, Poland Spring (Id. at p. 54);

the statute required that a new code be placed on all bottles and mark each bottle asbeing for sale exclusively in New York State (Id.);

the code that required marketing exclusively in New York prevents commerce in those

bottles outside New York (Id. at 54);

the above provision is a violation of the Commerce Clause (Id. at 55);

the defendants are preliminarily enjoined from carrying out or enforcing the phase[sic] of the statute which provides that bottles with the new labels are to be soldexclusively in the State of New York (Id.);

about the other phase [sic] of the statute, aside from the one Ive just described aboutexclusivity, there is no objection. (Id.);

except that there is a very strong objection on . . . due process grounds of what istermed an impossible deadline to have all this arrangement done by June 1 (Id.);

the Court granted a preliminary injunction against the enforcement of the June 1, 2009deadline and entertained a proposed order for a more reasonable deadline. (Id. at 55-


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15

56).

A comparison of the transcript with the Courts order demonstrates that the procedural

safeguards of Rule 65(d) were ignored or forgotten. Here, the preliminary injunction, crafted entirely

by the plaintiffs with the exception of the elimination of the Sugar Water Exception, represents the

very kind of overbroad and vague injunctive relief that courts within the Second Circuit have

criticized. See Shinnecock Indian Nation, 560 F. Supp. 2d at 190. Specifically, not only does the

preliminary injunction enjoin the defendants from implementing or enforcing the New York-

exclusive Universal Product Code provision of the [Bottle Bill] as amended, [ECL] 27-1012.12,

but it also enjoins the defendants from implementing and enforcing any and all other amendments

to the Bottle Bill signed into law on April 7, 2009, until April 1, 2010, to allow persons subject to the

amendments sufficient time to comply with the laws requirements. (Wen Decl., Ex. D).

On its face, the preliminary injunction renders all implementation and enforcement of the

Bottle Bill Amendments signed into law on April 7, 2009 and not merely the challenged provision

involving the NY-exclusive UPC with its June 1, 2009 effective date preliminarily found to be invalid

by the Court a violation of the injunction and, consequently, a basis for a civil contempt order. See,

e.g., Shinnecock Indian Nation, 560 F. Supp. 2d at 190. However, the sole questions before the Court

in the instant action were whether the NY-exclusive UPC provision and accompanying June 1, 2009

effective date were violations of the Commerce Clause and Substantial Due Process, respectively, and

whether the Sugar Water Exception was a violation of the Equal Protection Clause. These limited

questions determined the scope of the preliminary injunction hearing and underlay the Courts ruling

on the record on May 27, 2009. That the Court found ECL 27-1012.12, the NY-exclusive UPC

provision with its June 1, 2009 effective date, to be invalid does not justify an unlimited broadening


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of the injunction. The plaintiffs had not challenged the remaining Bottle Bill Amendments in their

motion for a preliminary injunction or in the complaint, and stated affirmatively that they had no

objections to them during the May 27, 2009 hearing. (Wen Decl., Ex. C, p. 11, 17-23; p. 12, 19-23;

p. 13, 1-11).

Furthermore, when asked for a reasonable time frame for compliance, the plaintiffs stated at

the hearing that they required a minimum of October 1, 2009. (Wen Decl., Ex. C, p. 30). But when

the parties were directed to submit a time frame, the plaintiffs proposed an entire year for compliance,

which the Court inexplicably endorsed. Id., at p. 30, 21-23.

To so expand the scope of injunctive relief beyond its findings that the NY-exclusive UPC

labeling provision and June 1, 2009 effective date were violations of the Commerce Clause

effectively precludes the wholesale enforcement of the remaining unchallenged Bottle Bill

Amendments for the next ten months. Thus, the overbroad and vague preliminary injunction must

be modified because it is inconsistent with Second Circuit precedent vacating such overbroad and

vague injunctions. See Shinnecock Indian Nation, 560 F. Supp. 2d at 191 (citing, inter alia, Ibeto

Petrochemical Indus. Ltd. v. M/T Beffen, 475 F.3d 56, 65 (2d Cir. 2007) (ordering district court to

modify its injunction with a specificity consonant with [Second Circuits] determination that the

injunction in this case cuts much too broadly); Metro. Opera Assn, Inc. v. Local 100, Hotel

Employees and Rest. Employees Intl Union, 239 F.3d 172, 178-79 (2d Cir. 2001) (holding, in First

Amendment case, that the vagueness of this injunction serves as sufficient reason to require that we

vacate it); Starter Corp. v. Converse, Inc., 170 F.3d 286, 300 (2d Cir. 1999) (holding, in trademark

case, that [b]ecause the injunction exceeds the jurys findings of infringement upon Converses

rights, it is overly broad and, in that respect, represents an abuse of the discretion of the district


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17

court); and Okaw Drainage Dist. of Champaign and Douglas County v. Natl Distillers and Chem.

Corp., 882 F.2d 1241, 1247-48 (7th Cir. 1989) (affirming district courts denial of overbroad

injunctive relief because injunction so much broader in scope than the injury sought to be prevented

would, if granted, exhibit a lack of equity on its face, and this is reason enough for refusing to issue

the injunction) (citation omitted)).

Accordingly, this Court should modify the preliminary injunction to enjoin the defendants

from implementing and enforcing the only provision that was deemed invalid, ECL 27-1012.12,

until October 1, 2009. As it stands, the preliminary injunction is both broader in both scope than the

relief requested by the plaintiffs, including the minimum time frame requested, and it is too vague as

to which of the remaining unchallenged and already-effective provisions of the Bottle Bill

Amendments would be enjoined.

B. The Order Should Be Modified As It Is Internally Inconsistent and Ambiguous

and Therefore Violates Rule 65(d)

Since an injunction . . . circumscribes [a persons] conduct and does so under a threat of

punishment, it is reasonable to require that those enjoined be given fair notice of the conduct that is

being punished. Goldic Elec. Inc. v. Loto Corp. USA, 27 Fed. Appx. 71, 2001 U.S. App. LEXIS

25388, at *74 (2d Cir. 2001) (summary order) (quoting WRIGHT,MILLER&KANE, Federal Practice

and Procedure, Civil 2d 2955); see also Corning Inc. v. Pic Vue Elecs., Ltd., 365 F.3d 156, 157 (2d

Cir. 2004). Specificity in the language of an injunction is absolutely vital in a case where a federal

court is asked to nullify a law duly enacted by a sovereign state. Gunn v. University Committee to

End War, 399 U.S. 383, 389 (1970). The Order violates FED.R.CIV.P. 65(d)(1)(C) because it does

not describe in reasonable detail the act or acts restrained or required due to its internal inconsistency


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and consequent ambiguity.

The language of the Order challenged here is uncertain and equivocal. Paragraph 1 of the

Order states unmistakably that defendants are enjoined from implementing or enforcing the New

York-exclusive Universal Product Code provision of the New York State Returnable Container Act

(the Bottle Bill) as amended. . . . (Wen Decl., Ex. D). In paragraph 3, the Court crossed out and

initialed language enjoining the definition of water as set forth in the amended Bottle Bill. Id. at 2.

If the Court understood when it initialed paragraph 2, which enjoins implementation and enforcement

of any and all other amendments to the Bottle Bill, that the Amendments were enjoined in their

entirety, then paragraph 1 is unnecessary and mere surplusage. Further, if the Court thought that the

Amendments were enjoined in their entirety, then the Court need not have crossed out and initialed

paragraph 3.

As the language of the Order now stands, various questions logically arise. Pursuant to the

removal of paragraph 3, are defendants allowed to enforce and implement the Sugar Water Exception

because it is not enjoined? Or is the Sugar Water Exception enjoined by the language of paragraph

2? If the answer to this question is in the affirmative, then what is the purpose of paragraph 1, which

the Court should have crossed out as the New York-exclusive Universal Product Code is presumably

enjoined by the language of paragraph 2?

Further, it is unclear whether this preliminary injunction or any injunction which enjoins a

specific effective date of a statute can or does enjoin provisions of the same statute having earlier

effective dates. Here, several provisions of the Bottle Bill Amendments were effective April 1, 2009;

others were effective on April 7, 2009. (Clarke Decl., 14, 16-18, Ex. A). For instance, one of the

amendments expanded the authority of the DEC to promulgate rules and regulations and another


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granted the DEC the power to establish a public education program. Given the ambiguities of the

May 29, 2009 Order, the DEC cannot promulgate rules and regulations on certain topics or establish

a public education program without the fear that it will be held in contempt.

Statutes must be interpreted, if possible to give each word some operative effect. Building

and Construction Trades Council v. Downtown Dev., Inc., 448 F.3d 138, 156 (2d Cir. 2006) (citations

omitted). The same standard applies to the language of a preliminary injunction for the protection

of those enjoined. Justice requires that the language of the preliminary injunction be modified, given

its internal inconsistencies and ambiguity and that the consequence of disobedience may be a finding

of contempt. The threat of contempt is unjust to the State defendants where the language of the

preliminary injunction is so inexact and incoherent.

C. In Any Event, Only the Provision of the Bottle Bill Amendments Found to be Invalid

by the Court Should Be Severed, With the Remaining Unchallenged Provisions Left

Intact and Enforceable.

In any event, because the original Bottle Bill contained a severability clause that was not

repealed by the Bottle Bill Amendments, only the provision of the Bottle Bill Amendments that was

found to be invalid by the Court, ECL 27-1012.12, should be severed, leaving the remaining

unchallenged provisions intact and enforceable.

In determining severability, the Supreme Court has instructed that [u]nless it is evident that

the Legislature would not have enacted those provisions which are within its power, independently

of that which is not, the invalid part may be dropped if what is left is fully operative as a law. New

York v. Oneida Indian Nation, 78 F. Supp. 2d 49, 56 (N.D.N.Y 1999) (quoting Alaska Airlines, Inc.

v. Brock, 480 U.S. 678, 684 (1987)). Thus, federal courts will honor the severability clauses so long

as the valid and invalid portions of the [statute] are not so intertwined that severance of the invalid


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portion leaves the regulatory scheme in a manner unintended by the legislative body, or if such

severance amounts to a judicial re-writing of the [statute]. Nichols Media Group, LLC v. Town of

Babylon, 365 F. Supp. 2d 295, 318 (E.D.N.Y. 2005) (citing Natl Advertising Co. v. Babylon, 900

F.2d 551, 557-58) (2d Cir. 1990)). The critical issue is whether the legislation would have been

enacted if it had not included the unconstitutional provisions. Natl Advertising Co., 900 F.2d at 557

(citing, inter alia, United States v. Jackson, 390 U.S. 570, 585 n. 27 (1968)). Put another way, the

unconstitutional provision must be severed unless the statute created in its absence is legislation that

[the Legislature] would not have enacted. Oneida Indian Nation, 78 F. Supp. 2d at 56 (quoting

Brock, 480 U.S. at 685). When a severability clause is contained in a statute, a presumption arises

in favor of severability, and thus, unless there is strong evidence that [the Legislature] intended

otherwise, the objectionable provision can be excised from the remainder of the statute. Id.; see also

EEOC v. CBS, Inc., 743 F.2d 969, 971 (2d Cir. 1984) (stating [w]hether or not [federal courts]

should sever an unconstitutional provision from the remainder of the statute in which it appears is

primarily an issue of legislative intent), superseded by statute as stated in EEOC v. Westinghouse

Electric Corp., 765 F.2d 389, 390-91 (3d Cir. 1985).

Thus, this Court must look to the statute and its relevant legislative history to decide whether

the New York State Legislature would have passed the remaining provisions of the Bottle Bill

Amendments without ECL 27-1012.12, the NY-exclusive UPC provision which had its own June

1, 2009 effective date. See CBS, Inc., 743 F.3d at 971. The original Bottle Bill contained a

severability clause, added in 1982, which stated:


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The provisions of this title shall be severable and if any phrase, clause,sentence or provision of this title, or the applicability thereof to anyperson or circumstance shall be held invalid, the remainder of this titleand the application thereof shall not be affected thereby.

ECL 27-1019 (2009). This severability clause was not amended or repealed with the Bottle Bill

Amendments. (Wen Decl., Ex. A, 13-16). Because the Bottle Bill Amendments did not repeal the

severability clause, therefore a presumption arises in favor of severability for which the plaintiffs must

show strong evidence that the Legislature intended that the Bottle Bill Amendments, and ECL

27-1012.12, were not severable. See Brock, 480 U.S. at 685; Oneida Indian Nation, 78 F. Supp. 2d

at 56. This the plaintiffs simply cannot do, given the number of provisions which do not affect the

plaintiffs (Clarke Decl., 20-23), and which they do not challenge here.

POINT II

THE AMOUNT OF THE BOND POSTED BY PLAINTIFFS

MUST BE INCREASED.

In any event, the $10,000 bond posted by the plaintiffs must be increased. FED.R.CIV.P.

65(c) requires that a Court may issue a preliminary injunction only if a movant gives security in an

amount that the Court considers proper to pay the costs and damages sustained by any party found

to have been wrongfully enjoined or restrained. See Blumenthal v. Merrill Lynch, Pierce, Fenner &

Smith, Inc., 910 F.2d 1049, 1051 (2d Cir. 1990) (a party subjected to a preliminary injunction in

district court who is later found to have been wrongly enjoined may recover against the security

bond damages suffered as a result of the injunction).

Here, whether or not the language of the Order is modified, the amount of the bond posted by

plaintiffs, $10,000.00, must be increased to cover the possible losses suffered by the defendants and

the State of New York during the time this injunction is in effect in the event it is found to have been


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wrongly issued. An injunction covering any and all other amendments to the Bottle Bill will cause

the New York State General Fund to lose an estimated $86 million by March 31, 2010, due to

defendants inability to collect 80 percent of unredeemed deposits from beer and soda containers

alone. An additional 29 million dollars will be lost in the same time frame from water bottlers

covered by this preliminary injunction. (Scheuermann Decl., 10-11).

The amount of an injunction bond is within the discretion of the Court. An error in setting

the bond too high, however, is not serious because the damages caused by an erroneous preliminary

injunction cannot exceed the amount of the bond posted as security. Russell v. Farley, 105 U.S. 433,

437 (1882); Mead Johnson & Co. v. Abbott Lab., 201 F.3d 883, 888 (7th Cir.), cert. denied 531 U.S.

917 (2000).

A meager $10,000.00 bond simply will not cover even a meaningful fraction of the losses to

the defendants, the State, and the citizens of New York imposed by this preliminary injunction.

Assuming arguendo for the purposes of this calculation only, that granting more time for compliance

with the Bottle Bill Amendments to the water bottlers is found to be correct, the State will still lose

$86 million because the preliminary injunction prevents the collection of moneys from the beer and

soda manufacturers. (Ex. E, Scheuermann Decl., 10). This result is particularly harsh where the

plaintiffs affirmatively stated at oral argument that the 80/20 split of the value of unredeemed deposits

was not challenged by their application for interim relief. (Wen Decl., Ex. C, p. 11, 22-24; p. 12, 19-

23; p. 13, 5-10). In the event it is determined in the future that the injunction was erroneously granted

to the water bottlers, then the State would have lost an additional $29 million. (Scheuermann Decl.,

11).

Given the possibility of this enormous loss to the public fisc during a financial crisis when


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New York State revenues have been buffeted by the downturn, this Court should exercise its

discretion and order plaintiffs to post a bond in the amount of $115 million for all moneys lost or, for

$86 million, if the injunction is not modified to allow collection of unredeemed deposit moneys from

manufacturers of beverages covered by the Bottle Bill prior to the April 2009 Bottle Bill Amendments

or, for at least $29 million if the preliminary injunction is modified so that it applies only to water

bottlers.


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CONCLUSIONFor the reasons stated above, the defendants respectfully request that this Court modify the

injunction to sever only the challenged provision, ECL 27-1012.12, that was found to be invalid bythe Court, which should only be enjoined until October 1 ,2009, and leave the remaining provisionsofthe Bottle Bill Amendments intact to be implemented and enforced by the defendants. Further, theCourt should raise plaintiffs' bond from $10,000.00 to $115 million if the injunction is not modified.

Respectfully submitted,ANDREW M. CUOMOAttorney General of theState ofNew YorkAttorney for Defendants120 BroadwayNew York, New York 10271

By: ~ ! L ~ FREDERICK H. WENAssistant Attorney General120 BroadwayNew York, New York 10271(212) 416-8618/6536(212) 416-6075/6076/6009 (fax)[email protected] DUFFYFREDERICK H. WENAssistant Attorneys General

of CounselDate completed: June 9, 2009

24

Bottle Bill Counter Claim

Documents

Transcript of Bottle Bill Counter Claim