IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT

No. C066493

GEORGE HAHN, an individual, CALIFORNIA VERMICULTURE, LLC, and a California corporation, individually and as successor in interest to GEORGE HAHN dba CALIFORNIA VERMICULTURE/TREE & PLANT RESCUE, Plaintiffs and Appellants, v. CALIFORNIA DEPARTMENT OF PESTICIDE REGULATION, Defendant and Respondent.

On Appeal from the Superior Court of Sacramento County (Case No. 34-2009-80000361, Honorable Timothy M. Frawley, Judge)

APPELLANTS’ OPENING BRIEF

DEBORAH J. LA FETRA, No. 148875 TIMOTHY SANDEFUR, No. 224436 BRANDON M. MIDDLETON, No. 255699 Pacific Legal Foundation 3900 Lennane Drive, Suite 200 Sacramento, California 95834 Telephone: (916) 419-7111 Facsimile: (916) 419-7747 Attorneys for Plaintiffs and Appellants

State of California Court of Appeal Third Appellate District CERTIFICATE OF INTERESTED ENTITIES OR PERSONS California Rules of Court, rules 8.208, 8.490(I), 8.494(c), 8.496(c), or 8.498(d)

Court of Appeal Case Caption: George Hahn, et al. v. California Department of Pesticide Regulation Court of Appeal Case Number: C066493 Please check here if applicable: G

There are no interested entities or persons to list in this Certificate as defined in the California Rules of Court.

Name of Interested Entity or Person Nature of Interest (Alphabetical order, please.) 1. George Hahn Owner 2. 3. Please attach additional sheets with Entity or Person information, if necessary.

_____________________________________ TIMOTHY SANDEFUR

May 6, 2011.

Printed Name: State Bar No: Firm Name & Address:

Timothy Sandefur 224436 Pacific Legal Foundation 3900 Lennane Drive, Suite 200 Sacramento, CA 95834

Party Represented:

Plaintiffs and Appellants

ATTACH PROOF OF SERVICE ON ALL PARTIES WITH YOUR CERTIFICATE

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TABLE OF CONTENTS Page CERTIFICATE OF INTERESTED ENTITIES OR PERSONS . . . . . . . . . i TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A. “Worm Gold” Brand Fertilizers . . . . . . . . . . . . . . . . . . . . . . . . . . 4 B. How Worm Gold Brand Fertilizers Make Plants Resistant to Pests . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 C. Worm Gold Sales and Advertising . . . . . . . . . . . . . . . . . . . . . . . . 9 D. DPR’s Investigations and Citations of Hahn . . . . . . . . . . . . . . . 12 QUESTION PRESENTED AND STANDARD OF REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 I. THE SUPERIOR COURT ERRED IN HOLDING THAT ANY PRODUCT OF WHATEVER NATURE IS A “PESTICIDE” IF IT IS EVER DESCRIBED AS CAUSING PEST AVOIDANCE . . . . . . . 15 A. Worm Gold Products Are Not Actually Pesticides . . . . . . . . . . 15 B. A Product That Repels Pests Only Indirectly Through a Plant’s Natural Bioresistant Processes Is Not a Pesticide . . . . . 16 II. THE SUPERIOR COURT ERRED IN HOLDING THAT A NON-PESTICIDE PRODUCT BECOMES A PESTICIDE IF A PERSON MAKES A “PESTICIDAL CLAIM” THAT THE PRODUCT INDIRECTLY CAUSES PEST REPELLENCY . . . . . 22

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Page A. The Decision Below Leads to Absurd Results . . . . . . . . . . . . . . 23 B. The Decision Below Is Contrary to Precedent . . . . . . . . . . . . . . 26 C. “Pesticidal Claim” Is Not an Element of Any Statute or Regulation and Is an Undefined and Vague Term . . . . . . . . . 28 D. The Superior Court’s Expansive Interpretation of the Statute Threatens Important First Amendment Rights . . . . . . . . 30 E. DPR Should Not Be Allowed to Expand Its Authority Through an Extreme and Unreasonable Interpretation of the Statute . . . . . . . . . . . . . . . . . 33 III. HAHN DID NOT MARKET WORM GOLD BRAND FERTILIZERS AS PESTICIDES . . . . . . . . . . . . . . . . . . . 37 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 CERTIFICATE OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 DECLARATION OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

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TABLE OF AUTHORITIES Page Cases Abuelhawa v. United States, 129 S. Ct. 2102 (2009) . . . . . . . . . . . . . . . . . 14 Byrum v. Landreth, 566 F.3d 442 (5th Cir. 2009) . . . . . . . . . . . . . . . . 31-32 Canon v. Justice Court, 61 Cal. 2d 446 (1964) . . . . . . . . . . . . . . . . . . . . . 32 Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Coal. of Concerned Communities, Inc. v. City of Los Angeles, 34 Cal. 4th 733 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 26 Foxgate Homeowners’ Ass’n v. Bramalea California, Inc., 26 Cal. 4th 1 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 In re Actimmune Mktg. Litig., 614 F. Supp. 2d 1037 (N.D. Cal. 2009) . . . . . . . . . . . . . . . . . . . . . . . . . 31 Leslie’s Pool Mart, Inc. v. Dep’t of Food & Agric., 223 Cal. App. 3d 1524 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 27 Littoral Dev. Co. v. San Francisco Bay Conservation & Dev. Comm’n, 24 Cal. App. 4th 1050 (1994) . . . . . . . . . . . . . . . . . . 35 People v. Moore, 31 Cal. App. 4th 489 (1994) . . . . . . . . . . . . . . . . . . . . . 17 People v. Worst, 57 Cal. App. 2d Supp. 1028 (1943) . . . . . . . . . . . . . . 2, 17-22, 26-27, 37 Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524 (2011) . . . . . . . 23 Pitney-Bowes, Inc. v. State, 108 Cal. App. 3d 307 (1980) . . . . . . . 14, 33-34 Roberts v. Farrell, 630 F. Supp. 2d 242 (D. Conn. 2009) . . . . . . . . . . . . . 32

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Page Santa Ana Unified Sch. Dist. v. Orange County Dev. Agency, 90 Cal. App. 4th 404 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Schneider v. Cal. Coastal Comm’n, 140 Cal. App. 4th 1339 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . 14, 33-35 Turner v. State, 850 S.W.2d 210 (Tex. App. 1993) . . . . . . . . . . . . . . . . . . 28 Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976) . . . . . . . . . . . . . . . . . . . 30 Welton v. City of Los Angeles, 18 Cal. 3d 497 (1976) . . . . . . . . . . . . . . . . 32 United States Constitution U.S. Const. amend. I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 22, 30-33 California Statutes 1988 Cal. Stat., ch. 161, § 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Bus. & Prof. Code § 12210(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Evid. Code § 452(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 § 452(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Food & Agric. Code § 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 § 12753 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim § 12753(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 § 12993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim § 14533 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 § 14548 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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Page California Regulations Cal. Code regs. tit. 3, § 2304 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Cal. Code Regs. tit. 3, § 6145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Cal. Code Regs. tit. 3, § 6145(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Cal. Code Regs. tit. 3, § 6147 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Miscellaneous Brown, Charles R., USDA Agricultural Research Service, Scientists Use Old, New Tools to Develop Pest-Resistant Potato (Apr. 2009), available at http://www.ars.usda.gov/is/AR/ archive/apr09/potato0409.htm (last visited May 3, 2011) . . . . . . . . . . . 25 Darwin, Charles, The Formation of Vegetable Mould Through the Action of Worms (1881) . . . . . . . . . . . . . . . . . . . . . 5 Flint, M. L., Univ. of Cal. Statewide Integrated Pest Mgmt. Program, Pests in Gardens and Landscapes: Aphids (May 2000), available at http://www.ipm.ucdavis.edu/PMG/ PESTNOTES/ pn7404.html (last visited May 3, 2011) . . . . . . . . . 23-24 McGraw, Linda, USDA Agricultural Research Service, New Plants Put a Hurt on Pests (Feb. 18, 1999), available at http://www.ars.usda.gov/IS/pr/ 1999/ 990218.htm (last visited May 3, 2011) . . . . . . . . . . . . . . . . . . . . . 7 Merzendorfer, Hans & Zimoch, Lars, Chitin Metabolism in Insects: Structure, Function and Regulation of Chitin Synthases and Chitinases, 206 J. of Experimental Bio. 4393 (2003) . . . . . . . . . . . . . . . . . . . . . . . . 7 Ortho Home Gardener’s Problem Solver (2004) . . . . . . . . . . . . . . . . . . . 24

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Page Quiros, Carlos F., Univ. of Cal. Coop. Extension, Vegetable Research & Information Center, Development of Fusarium Resistant Celery, available at http://vric.ucdavis.edu/veg_info/ fusarium celery.htm (last visited May 3, 2011) . . . . . . . . . . . . . . . . . . . 25 9 Witkin, B.E., California Procedure (3d ed. 1985) . . . . . . . . . . . . . . . . . 17

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INTRODUCTION The California Department of Pesticide Regulation (DPR) fined small businessman George Hahn $100,000 for selling a fertilizer or plant food, called Worm Gold, which is made of worm feces (called worm “castings”).1 Although worm castings are a part of all normal garden soil, the DPR declared Worm Gold to be a pesticide under Section 12753 of the California Food and Agricultural Code.2 It did so not because Worm Gold is poisonous—it is not; indeed, worm castings are not harmful in any way,3 or marketed or represented as poisons. Worm Gold is not ingested by pests, is not physically injurious to pests, and does not act directly on pests at all.4 Instead, when ingested by a plant, it enhances the plant’s natural resistance to pest infestation and only indirectly causes pests to avoid plants.5 But the DPR concluded, and the trial court affirmed, that any product, regardless of its nature, is legally deemed a

1

See infra at 4.

2

Section 12753 defines pesticide as “[a]ny substance, or mixture of substances which is intended to be used for defoliating plants, regulating plant growth, or for preventing, destroying, repelling, or mitigating any pest . . . which may infest or be detrimental to vegetation, man, animals, or households, or be present in any agricultural or nonagricultural environment whatsoever.” Unless otherwise stated, all references to “sections” are to the Food and Agricultural Code.

3

See infra at 6.

4

See infra at 6.

5

See infra at 6-9. -1-

pesticide under Section 12753 whenever anyone makes a “pesticidal claim” about that product.6 Under this theory, as the DPR conceded below, even water would qualify as a pesticide if a nursery employee recommended—as gardeners often do recommend—that a consumer spray plants with water to repel aphids.7 Such an extreme interpretation of the statute is in error, and should be reversed. First, Hahn’s fertilizers are not actually pesticides, because they do not act on pests, to repel them or in any other way. Worm Gold products only act on plants, which are thereby strengthened to resist pest infestation. Second, the decision below conflicts with established precedent, particularly People v. Worst, 57 Cal. App. 2d Supp. 1028 (1943), a case closely on point which holds that a natural product that does not actually operate on pests, but only produces a smell or is otherwise obnoxious to pests, is not a pesticide. Although briefed extensively below, the trial court did not address Worst at all. Third, the term “pesticidal claim” does not occur in any California law, and is so vague that it is impossible to determine what sorts of statements would or would not transform a product into a pesticide under the superior court’s interpretation of Section 12753. Fourth, the decision below leads to absurd results, would sweep in any number of obviously non-pesticidal products, including water,

6

Joint Appendix (JA) 101-05.

7

See infra at 23-26. -2-

or plants genetically engineered to resist pests, or even scarecrows or flyswatters, simply because someone says that such things can kill or repel pests. Finally, the trial court’s holding endangers important First Amendment rights, because it would prohibit Hahn from truthfully describing the qualities and characteristics of his products. The court should have avoided raising this constitutional problem. A more narrow construction of the statute would have avoided raising constitutional issues, would have construed DPR’s statutory jurisdiction in a more reasonable way, and would have more logically concluded that only actual pesticides, or products consistently represented as intended for direct use on pests (to kill or repel them), are pesticides under the statute. Under this more reasonable interpretation, the fine should be vacated. Hahn did not advertise Worm Gold products as pesticides. On the contrary, when Worm Gold advertisements are read in context, and not in a “cherry-picking,” out-ofcontext fashion, it is clear that Hahn consistently advertised these products as non-pesticides—as plant foods which strengthen the natural ability of plants to fight off pest infestation.8

8

See infra at 37-42. -3-

STATEMENT OF FACTS A. “Worm Gold” Brand Fertilizers George Hahn is an entrepreneur who owns and operates two companies called California Vermiculture, LLC, and Tree And Plant Rescue.9 These companies sell a fertilizer called Worm Gold, and certain derivative fertilizer products called Worm Gold Plus! and Worm Gold Premium Mix.10 Administrative Record (AR) 2:787.11 Worm Gold Plus! consists of worm castings added to rock mineral and fossilized kelp, to help increase plant growth. Worm Gold Premium Mix consists of worm castings, rock minerals, and a ready-to-use compost mix. Id. Tree And Plant Rescue also made a product called Tree & Plant Rescue Solution (TPRS), which was not sold to consumers, but which Tree And Plant Rescue used as part of its service of restoring the health of trees suffering from beetle infestations. Id. TPRS consists of Worm Gold Plus!, molasses, compost, and water. Id. Worm Gold brand fertilizers are soil amendments or “plant foods,” registered as required with the California Department of Food and Agriculture,

9

Unless otherwise stated, George Hahn, California Vermiculture, LLC, and Tree And Plant Rescue, are collectively referred to herein as “Hahn.”

10

Unless otherwise stated, Worm Gold, Worm Gold Plus!, and Worm Gold Premium Mix, are referred to hereinafter as “Worm Gold products” or “Worm Gold brand fertilizers.”

11

Citations to the two-volume Administrative Record are designated as “AR [Volume Number] : [Page Number].” -4-

AR 1:477-78, 2:1039-40, and composed of worm castings—the fecal product of worms. AR 1:787. Worm castings are a natural component of all healthy soil, which is usually permeated by naturally occurring worms. Gardeners have long used worm castings as an organic plant food that can help improve plants’ natural resistance to infestation by insects and other pests. AR 1:451-54, 1:573-74, 2:842. In the administrative hearing, DPR witness Dr. Don Koehler testified that worm castings can add nutrients to depleted or unhealthy soil. AR 2:884-85. He testified that “worm castings would be beneficial to a soil and to growing plants in it,” AR 2:884, and that although “if you have a soil that is pretty adequate in structure and function and nutrition, then the [worm castings] don’t necessarily add anything,” they would nevertheless be beneficial if they are “contributing something that isn’t already in the soil.” AR 2:885. The benefits of worm castings have been widely known to gardeners since at least the Nineteenth Century, when Charles Darwin wrote a book on worms and worm castings. AR 1:456,12 AR 2:1032. Earthworms play a vital role in the breakdown of organic matter and the release of nutrients into soil. AR 1:456-70, 2:1035. Worm castings (a.k.a. “vermicompost”) promote the growth of plants, and produce dramatic increases in germination, growth,

12

Charles Darwin, The Formation of Vegetable Mould Through the Action of Worms (1881). -5-

flowering, and crop yield. AR 2:1036. They also help plants to fend off attacks and pests. AR 1:471-76. B. How Worm Gold Brand Fertilizers Make Plants Resistant to Pests Worm Gold brand fertilizers are not intended to be ingested by pests, and do not kill insects. AR 2:1049; 2:1147. They do not act directly on pests at all, either to kill them or to bar them from approaching or lighting on a plant. Instead, Worm Gold brand fertilizers cause plants to flourish, fostering their natural resistant properties. Healthy plants are naturally more resistant to pest attacks. AR 2:988. Worm Gold brand fertilizers are not poisonous to humans; users are not required to use gloves when handling them, and they are not dangerous if they get in the eyes. AR 2:1048. They cannot contaminate vegetables. AR 2:1052. The specific method by which Worm Gold brand fertilizers work is as follows. Hahn harvests worm castings from “worm beds,” long tables full of dirt and worm food, which can be used to sift the worm castings from the bottom. AR 2:609, 2:614, 1:467-68. Hahn feeds the worms cardboard. AR 2:1035. The castings are then packaged immediately, or are mixed with kelp or compost and then packaged for sale. The user applies Worm Gold products to the soil surrounding a plant, AR 1:787, 2:604-15, 2:1038, 2:1066, or through “foliar application,” by spraying liquid Worm Gold products on the leaves, trunk, or stem, to speed up the plant’s ingestion of Worm Gold. -6-

AR 1:787, 2:1038, 2:1067. Once a plant ingests soil enriched by Worm Gold brand fertilizers, the plants increase their production of naturally occurring enzymes, in particular chitinase. AR 2:1050, 2:869-71.13 Insects can sense the presence of these enzymes in a plant’s vascular system, through something akin to the sense of smell, and choose to avoid that plant. AR 2:1049 (Q: “Do the bugs ingest Wormgold?” Hahn: “No. The bugs avoid Wormgold. If you put Wormgold down, ants won’t cross it.” Q: “Do you know whether it actually kills insects?” Hahn: “Have no instance—there is no relationship that it kills insects. The insects will avoid—the insects will avoid worm castings.”); AR 2:608 (patent materials describing the product working through pests’ natural “strong aversion” to chitinase). Hahn explained the process in a Worm Gold advertisement, “The bugs’ reaction to chitinase is similar to our reaction to sour milk. One drop of

13

Chintinase is an enzyme that degrades chitin, a polymer found in the exoskeletons of pest insects. AR 2:870. Hans Merzendorfer & Lars Zimoch, Chitin Metabolism in Insects: Structure, Function and Regulation of Chitin Synthases and Chitinases, 206 J. of Experimental Bio. 4393, 4393 (2003). Hahn believes that chitinase can “put[] a ‘chink in the armor’ of the insect’s stomach by causing chitinous membranes to disintegrate. Without this membrane, insects are helplessly vulnerable to microbial infections.” Linda McGraw, USDA Agricultural Research Service, New Plants Put a Hurt on Pests (Feb. 18, 1999), available at http://www.ars.usda.gov/IS/pr/1999/ 990218.htm (last visited May 3, 2011). However, as the DPR noted, this case does not depend on any factual determination as to the efficacy of Worm Gold products or whether chitinase works in this way. See AR 2:787 (n.8) (“[T]he efficacy of Wormgold products was not an issue in this hearing, and whether or not they work is unnecessary to resolution of this case.”). -7-

sour milk mixed into a glass of sweet milk and you will drink the glass with no negative reaction. However, mix in three tablespoons and no one has to convince you to not drink the milk.” AR: 1:368. Or, in a statement released by Tree And Plant Rescue: “[o]nce the systemic level of chitin degraders is such that chewing and sucking bugs can detect it, the bugs will avoid the plants.” AR 1:422. Worm Gold brand fertilizers do not poison pests, starve them, or prevent them from landing on a plant. Instead, they boost plants’ natural bioresistant mechanisms, which pests can detect, and which they will avoid. See also AR 2:626 (Advertisement: “tests revealed that chewing and sucking insects avoid plants that were mulched with worm castings . . . . [T]his product increases the plant’s natural defensive ability. This product is NOT a pesticide and no chemicals are used.”). Plants have evolved to resist pest infestation naturally. But, plants grown in soil that is organically depleted and/or has few earthworms are less able to resist infestations. When a gardener adds worm castings to the soil, the plant absorbs them, which causes the plant to increase its natural enzyme production, thus helping to make the plant less appetizing to insects. The natural boost to the plant’s “immune system” caused by worm castings enables the plant to produce signals that discourage insects from loitering around or eating the plants. AR 1:128-32 (newspaper article: “Bark beetles and other pests who sense the presence of chitin will not bore into the trees, Hahn

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discovered.”); AR 2:604-15 (patents describing how Worm Gold brand fertilizers work); AR: 2:471-76 (articles describing insects’ aversion to vermicomposts). Worm Gold brand fertilizers are not used on pests, and do not affect pests in any direct way. Instead, they are natural fertilizers that promote plant robustness, making plants more resistant to infestation. Because worm castings are non-toxic, they provide a non-poisonous alternative to chemical pest treatments and do not harm other valuable organisms in the soil. C. Worm Gold Sales and Advertising Beginning in 1998, Hahn sold Worm Gold products to nurseries, AR 2:1053, and applied Tree and Plant Rescue Solution to trees as a service, and advertised the products and services with advertisements that touted Worm Gold products’ ability to foster plants’ natural pest resistance.14 These

14

The Administrative Record contains numerous advertisements for Worm Gold products. See AR 1:94-98; 1:146-47; 1:175-77; 1:190; 1:192; 1:356-87; 1:396; 1:398-401; 1:405-31; 1:435-42; 1:492; 2:616-50; 2:677-78; 2:683-84. Many of these are duplicates. The Administrative Record also includes many advertisements from companies not associated in any way with Hahn: Organic Tree Care and Home Chek Services. Hahn proved, and the hearing officer found, that Hahn was not responsible for these companies’ actions. AR 2:795. This Court must therefore disregard any evidence related to, or advertisements published by, Organic Tree Care and Home Chek Services. The Superior Court did not specify which advertisements it considered violations, but cited “the evidence in the record” generally. JA at 104. The Administrative Hearing Officer identified quoted material he considered to be in violation. See AR 2:789-90, 2:792-93. Those advertisements appear at (continued...) -9-

advertisements promoted Worm Gold brand fertilizers’ capacity to make plants healthy and strong, and truthfully stated that insects would choose to leave or would avoid treated plants. One advertisement, for example, noted that “worm castings improve health of plants when used with a quality compost,” AR 1:371; another touted Worm Gold as “The Ultimate Soil Amendment,” noting that “aphids, spider mites, white flies, bark beetles, and other pest insects have left plants when they were fed WORMGOLD,” AR 1:634; another noted that “[b]ark beetles will avoid and not attack trees when the root zone bark and needles have been treated with the proper beneficial microorganisms.” AR 1:97. Still another noted that “[b]eetles will avoid conifers . . . that have been treated with Tree and Plant Solution.” AR 1:420. Still another emphasized “Improved Growth With Worm Castings.” AR 1:373. Hahn did not advertise Worm Gold brand fertilizers with the word “pesticide,” or claim that they killed pests. See, e.g., AR 2:1055, 2:1063, 2:1147. Instead, advertisements explained that “[t]his product is NOT a pesticide.” AR 1:492; AR 1:363 (“[I]t’s not a nasty pesticide . . . [or] a fungicide but those soil problems are gone.”); see also AR 1:115 (contrasting

14

(...continued) AR 1:97; 1:114; 1:362; 1:367; 2:638. He also found that a store display that included a handwritten sign describing Worm Gold as a “slug killer” was a violation, even while acknowledging that “the sign was created in the store, and not by [Hahn],” who had no control over any such sign. AR 2:790 n.12. - 10 -

Worm Gold products with pesticides and describing them as “dramatically different” than pesticides). On some occasions before government officials informed Mr. Hahn that such advertising statements were not allowed, advertisements for Worm Gold brand fertilizers did include statements that, taken out of context, implied that Worm Gold brand fertilizers themselves repel pests. Yet these advertisements also made clear that repellency effects resulted from the nourishing of the plant, and not from direct effects on the pests.

For example, one

advertisement stated: “Repels Bark Beetles Naturally,” AR 1:94, but went on to explain that pest repellency would follow only as an indirect consequence of Worm Gold’s action as a fertilizer—e.g., that the products “reintroduce beneficial microorganisms to your trees that were lost under adverse conditions such as drought,” and thereby “Revitalize[s] the Health of Trees.” Id. Another stated that Worm Gold products “fight[]diseases & problems for food & space,” and “Prevent[] further growth of pathogens or infection,” and had “disease suppressive effects.” AR: 2:628-29. Yet the same advertisement made clear that the product was intended to “stimulate new growth and revive plant health,” to serve as a “source for renewable nitrogen,” to “help[] retain soil moisture.” Id. In other words, when read in context, the advertisements stated that Worm Gold products, by feeding and strengthening a plant, can help it to resist infestation; the products were not advertised as pesticides.

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Taken in context and read as a whole, the advertisements stated that Worm Gold brand fertilizers are to be used to improve plant health and thereby strengthen the plants’ natural resiliency against attacks—not to kill or repel pests on their own. One client testimonial, for example, noted that “our vines treated with WORMGOLD and WORMGOLD Premium Mix have thicker, greener leaves, with more terminal bud growth and positive vigorous cane growth. The overall health of the vines are showing less stress . . . . [S]tress[ed] plants are turning around and starting to show more robustness.” AR 2:645. D. DPR’s Investigations and Citations of Hahn In the fall of 2004, the DPR and the Agriculture Commissioners of San Bernardino and Riverside Counties initiated investigations of Mr. Hahn and his companies. AR 1:133, 1:178-88. These investigations resulted from publicity about Hahn’s treatment of beetle-infested trees in the San Bernardino National Forest, and from advertisements on Mr. Hahn’s websites. AR 1:189-92, 1:388. Ultimately, Hahn was fined by the Riverside County Agriculture Commissioner (CAC), AR 1:178, although not by the San Bernardino CAC, which, after explaining state pesticide regulations to Mr. Hahn, rescinded its notice of violation. AR 2:1073, 2:1111. Hahn requested a hearing regarding the Riverside fine, and the fine was upheld by the Riverside CAC, who noted that Hahn “made every effort to comply with

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Federal, State and local law” and “made substantial proactive efforts to get information so that he could be in full compliance with all laws and regulations. There were several different government agencies involved in this information gathering process, giving seemingly contradictory and/or incomplete information.” AR 1:187, 2:1111. Finding no evidence that Worm Gold brand fertilizers were harmful to humans, the Riverside CAC reduced the fine. AR 1:188. On appeal, the DPR affirmed the Riverside CAC’s finding that Mr. Hahn had violated the statutes and increased the fine to $500, on the basis that the fact that these products are not harmful to humans was irrelevant. AR 2:668. The Director did not disturb the finding that Mr. Hahn acted in good faith. Mr. Hahn paid the fine on March 13, 2006. On April 18, 2007, the DPR initiated a new proceeding against Mr. Hahn, this time on the grounds that he had sold unregistered pesticides. AR 1:7. After various procedural delays, and after denying motions to dismiss, DPR convened a hearing for May 13 and 14, 2009. The Hearing Officer took evidence and testimony, and on September 23, 2009, the DPR held Hahn liable for the sale of an unregistered pesticide, and fined him $100,000. AR 2:785-805. Appellants sought a writ of mandate to reverse the DPR’s decision, JA at Tab 1, which was denied on August 16, 2010. JA at Tab 10. This timely appeal followed.

- 13 -

QUESTION PRESENTED AND STANDARD OF REVIEW Section 12993 prohibits the sale of “pesticides” that are not registered with the DPR. The question here is whether Hahn’s natural, non-poisonous plant food products are “pesticides” within the meaning of that section, and thus whether the DPR has statutory jurisdiction. Reviewing courts apply de novo review to the question of whether an administrative agency proceeded in excess of its jurisdiction. Schneider v. Cal. Coastal Comm’n, 140 Cal. App. 4th 1339, 1343-44 (2006). Courts should avoid construing administrative authority in a manner that “add[s] language” to the statute that gives the agency jurisdiction. Id. at 1345; accord, Pitney-Bowes, Inc. v. State, 108 Cal. App. 3d 307, 321 n.12 (1980) (“[A]bsent a clear legislative mandate, in the interest of the wise public policy of avoiding uncalled for and unnecessary regulation in the free market place, courts should exercise judicial restraint and refrain from scratching administrative agencies’ itch to expand their regulatory powers.”). Courts should “examine the words of the statute itself, attributing the usual, ordinary, and common sense meaning to them.” Santa Ana Unified Sch. Dist. v. Orange County Dev. Agency, 90 Cal. App. 4th 404, 409 (2001). Individual words and phrases in a statute must not be read in isolation, or read so as to “extend” a word “to the outer limits of its definitional possibilities.” Abuelhawa v. United States, 129 S. Ct. 2102, 2103 (2009) (citation omitted). - 14 -

Courts are not bound by a “literal interpretation” that “would result in absurd consequences the Legislature did not intend.”

Coal. of Concerned

Communities, Inc. v. City of Los Angeles, 34 Cal. 4th 733, 737 (2004). Context matters, because if statutory language is open to more than one reasonable interpretation, courts may consider other aids, including the statute’s purpose, legislative history, and public policy. Id. ARGUMENT I THE SUPERIOR COURT ERRED IN HOLDING THAT ANY PRODUCT OF WHATEVER NATURE IS A “PESTICIDE” IF IT IS EVER DESCRIBED AS CAUSING PEST AVOIDANCE A. Worm Gold Products Are Not Actually Pesticides Food and Agricultural Code section 12993 makes it illegal to sell a pesticide or a product represented to be a pesticide, without first registering it with the DPR. The term “pesticide” is defined in Section 12753 as: (a) Any spray adjuvant. (b) Any substance, or mixture of substances which is intended to be used for defoliating plants, regulating plant growth, or for preventing, destroying, repelling, or mitigating any pest . . . which may infest or be detrimental to vegetation, man, animals, or households, or be present in any agricultural or nonagricultural environment whatsoever. Worm Gold brand fertilizers are not pesticides, and the DPR therefore lacks jurisdiction. Worm Gold brand fertilizers do not defoliate plants or regulate

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plant growth, and are not intended to be used to prevent, destroy, repel, or mitigate pests. Instead, they are intended to be ingested by plants, in order to cause plants naturally to become strong and to resist pests through their natural bioresistance capacities. While in this sense Worm Gold products indirectly cause plants to ward off attacks by pests, so, too, do water, sunlight, and other nutritive components of garden soil. Worm Gold products themselves are simply not intended for use in any of the ways described by Section 12753. They do not repel pests; they cause plants to repel pests through their own natural resistant qualities. See further AR 2:1148 (Q: “Does [Worm Gold], in fact, cause plants to repel insects?” Hahn: “Absolutely. Very efficiently.”). Worm Gold products are therefore not actually pesticides. B. A Product That Repels Pests Only Indirectly Through a Plant’s Natural Bioresistant Processes Is Not a Pesticide The fact that a plant food, when properly used, causes a plant to undergo a natural process that makes it resistant to pests, does not make that plant food a pesticide. On the contrary, the language of Section 12753(b) contemplates substances which are directly applied to, or ingested by, pests. It refers to a “substance, or mixture of substances which is intended to be used for . . . preventing, destroying, repelling, or mitigating any pest.” (Emphasis added.) Worm Gold is not intended to be used for repelling pests; it is intended to be used for improving plant health and thereby encouraging the plant’s normal resistance to pests. The language of Section 12753 does not - 16 -

apply to a plant food which causes pest repellency only as a secondary or indirect consequence of nourishment. In Worst, 57 Cal. App. 2d Supp. 1028, the court15 determined that plants that deter gophers (“gopher purge”) are not pesticides and that the DPR therefore had no power to regulate them. These plants were not pesticides because they were “never represented as being a poison, or as being physically injurious to the gopher, or to be eaten by him, but only as being so obnoxious to his sense of smell as to discourage his presence in the immediate vicinity.” Id. at 1031. The court concluded that the Department of Agriculture had no statutory authority to require registration of natural products of which the “active ingredient . . . is produced by nature and not by chemicals or other artificial means.” Id. at 1030-31. The legal definition of pesticide “was never intended to, and does not, include a growing bush of the character here under consideration.” Id. at 1030. The plant was not an “economic poison,” id. at 1029, and did not become one simply because it was sold with advertisements touting its capacity to repel pests. This case is similar to Worst in every relevant respect. Worm Gold brand fertilizers are composed of naturally occurring products formed by

15

Worst was a decision of the superior court appellate division. Thus although it was not directly controlling on the court below, “‘the persuasive value of such opinions has been constantly recognized.’” People v. Moore, 31 Cal. App. 4th 489, 492 n.2 (1994) (quoting 9 B.E. Witkin, California Procedure 747-48 (3d ed. 1985)). - 17 -

worms in soil. They are not artificial chemicals or economic poisons. The DPR did not allege that Hahn represented Worm Gold brand fertilizers as poisons, or as being physically injurious to any pest or as intended for ingestion by pests. Cf. Worst, 57 Cal. App. 2d Supp. at 1031. Hahn advertised these products only as being so obnoxious to pests as to discourage their presence in the vicinity. Thus, as with the natural odor of the plant in Worst, Worm Gold brand fertilizers simply discourage the presence of pests in the vicinity where the products are applied. They do not qualify as “pesticides” or “economic poisons.” It makes no difference that Hahn’s worms are fed cardboard. Although the DPR relied heavily on this fact to distinguish Worst, see AR 2:798-99, the court in Worst actually addressed this same consideration and found it irrelevant. There, the government contended that gopher purge was not wholly natural because its gopher-repelling smell was enhanced by feeding the plant vitamins, and that the plant was therefore a pesticide. See 57 Cal. App. 2d Supp. at 1031. The court rejected this argument as, again, too expansive. Herbicides, it noted, are included in the definition of pesticides, so such an argument would mean that weed-preventative grasses would also qualify as “pesticides” and require DPR registration: If this is true, as “weeds” are listed along with “rodents” in section 1061, one could not, without first complying with section 1071, grow a lawn clover, with the aid of a fertilizer, and sell it under the representation that it is more rugged than devil’s - 18 -

grass and will prevent the growth of the latter when planted in a lawn. We cannot agree that this law was ever intended to be, or is, so inclusive. Id. In short, natural products that merely deter pests indirectly by producing a smell or taste that pests find obnoxious—be it gopher purge or Worm Gold brand fertilizers—are not pesticides, even if the smell is enhanced by the addition of nutrients. The Worst case was reaffirmed in Leslie’s Pool Mart, Inc. v. Dep’t of Food & Agric., 223 Cal. App. 3d 1524, 1534 (1990), which described Worst as a case in which the Department “overstepped its statutory authority.” Leslie’s Pool Mart noted that when the Legislature amended Section 12753 after Worst, it chose not to change that case’s interpretation of the statute; the amendment was merely “‘declaratory of existing law and [did] not constitute a change in the law.’” Leslie’s Pool Mart, 223 Cal. App. 3d at 1538 n.12 (citing 1988 Cal. Stat., ch. 161, § 4). The Legislature’s acquiescence in the Worst decision reinforces Hahn’s position in this case.

In Cel-Tech

Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 178 (1999), the supreme court noted that although “[l]egislative inaction is often not a convincing reason to refuse to change a statutory interpretation,” it was sufficient where the judicial interpretation in question had stood unchanged “for almost half a century,” was unambiguous, and where the Legislature had amended other portions of the statute. These factors are all present here. The

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DPR regarded Worst as outdated, but the longevity of that decision, and the Legislature’s choice not to disturb it, imply that the Legislature was aware of the precedent holding that purely natural products are not pesticides and therefore not subject to the registration requirement in Section 12753, and chose not to disturb that precedent. Hahn’s argument is also buttressed by the administrative regulations interpreting the statute. Title 3, section 6147, of the California Code of Regulations provides a list of exemptions to the registration requirement; that list includes only natural products which are used directly to repel pests, such as garlic or cinnamon. It does not include any products which, like Worm Gold fertilizers, are only used to encourage plant health, and only indirectly prevent pest infestation. Title 3, section 2304, of the Code of Regulations, by contrast, is a regulation governing fertilizers, not pesticides, and it does explicitly contemplate fertilizers or plant foods that have secondary effects like those caused by Worm Gold. That regulation states: “All fertilizing materials for which claims are made relating to organisms, enzymes [e.g., chitinase] or organisms by-products are auxiliary soil and plant substances.” Because the relevant statutes and regulations should be read as a whole wherever possible, these regulations support Hahns’ interpretation: Plant foods that encourage

- 20 -

plants’ natural strength against pest attacks should be regarded as fertilizers, not as pesticides.16 Under Worst, a natural product that deters pests only in an indirect manner—that does not act on pests and is not ingested by pests, but merely produces an odor or otherwise causes pests to avoid an area—is not a pesticide, even if it is advertised as ultimately causing pests to leave a plant or an area. Like the plant that gophers chose to avoid in that case, Worm Gold brand fertilizers are merely natural substances that have indirect, pest-deterring effects, and are therefore not pesticides. The fact that their pest-deterring effects are truthfully advertised does not convert these products into pesticides under the statute.

Since only pesticides or products represented to be

pesticides are subject to the registration requirement in Section 12753, Worm Gold products are not prohibited by the statute and the DPR’s fine should be vacated.

16

Worm Gold brand fertilizers do fall within the statutory definition of “fertilizer” in Food and Agriculture Code section 14533 (“any commercial fertilizer, agricultural mineral, auxiliary soil and plant substance, . . . or packaged soil amendment”) and “natural organic fertilizer” in Section 14548 (“[M]aterials derived from . . . animal products containing one or more nutrients other than carbon, hydrogen, and oxygen, which are essential for plant growth, which may be subjected to biological degradation processes under normal conditions of aging, rainfall, sun-curing, air drying, composting, rotting, enzymatic, or anaerobic/aerobic bacterial action.”). - 21 -

II THE SUPERIOR COURT ERRED IN HOLDING THAT A NON-PESTICIDE PRODUCT BECOMES A PESTICIDE IF A PERSON MAKES A “PESTICIDAL CLAIM” THAT THE PRODUCT INDIRECTLY CAUSES PEST REPELLENCY The superior court appeared to acknowledge that Worm Gold products are not actually pesticides, but held that as a matter of law a product is deemed a pesticide, regardless of its actual nature, whenever a person makes a “pesticidal claim” about that product, meaning a claim that might “reasonably would lead consumers to believe that the products can and should be used to repel insects and control plant fungus.” JA at 104. Such an interpretation cannot withstand scrutiny. First, it leads to absurd results, making any product—even water or “gopher purge”—into a pesticide whenever a person says that the product can be used, even indirectly, to keep pests away from plants. Indeed, the decision below is directly contrary to Worst, which although extensively briefed below, the superior court never cited or addressed in its decision. Second, the term “pesticidal claim” is vague and undefined, making it impossible for businesses to know what information they may and may not legally disseminate about their products. Finally, a blanket prohibition against making “pesticidal claims” about legal products would violate the First Amendment, which guarantees a business’ right to make truthful and non-misleading statements about its products. Because - 22 -

courts should avoid interpretations of statutes that threaten constitutional rights, the trial court should have construed the statute narrowly. Making a “pesticidal claim” about a product is not sufficient to make that product a pesticide if it is not used directly on pests to kill or repel them. A. The Decision Below Leads to Absurd Results When possible, a statute should be interpreted to avoid anomalous or absurd results. Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524, 533 (2011); Foxgate Homeowners’ Ass’n v. Bramalea California, Inc., 26 Cal. 4th 1, 14 (2001). But construing Sections 12753 and 12993 to deem any product, regardless of its actual nature, to be a pesticide whenever a person makes a “pesticidal claim” about that product would have absurd results. It would transform even obvious non-pesticides, such as water or “gopher purge,” into “pesticides” under the statute. The DPR’s witnesses admitted that under the broad interpretation of “pesticide” used here, water—which professional gardeners recommend using to eradicate pests such as whiteflies or thrips17—would qualify as a pesticide. AR 2:889 (Q: “If water was sold and it was sold on the basis it kills or repels insects, is it your opinion that it would

17

See M. L. Flint, Univ. of Cal. Statewide Integrated Pest Mgmt. Program, Pests in Gardens and Landscapes: Aphids (May 2000), available at http://www.ipm.ucdavis.edu/PMG/PESTNOTES/pn7404.html (last visited May 3, 2011). Appellants request that this Court take judicial notice that this publication recommends the use of water to repel or eliminate pest infestations. - 23 -

be registered?” Dr. Koehler: “A direct answer to that specific question would be yes.”); AR 2:988 (Mr. Dearmin: “If they’re marketing [water] as a pesticide, we would pursue it.”). Indeed, water is more like a pesticide than is Worm Gold, because water acts directly on pests, whereas Worm Gold products do not; they only act on plants, causing the plants to become unattractive to pests. Indeed, under the superior court’s interpretation, any product that might have an indirect effect on a pest would qualify as a pesticide and be subject to the statutory registration requirement, including all fertilizers or plant foods, since they also cause plants to flourish and thereby deter pests. Not only would tap water, barbed wire, or scarecrows qualify as pesticides, but so would other obvious non-pesticides. U.C. Davis recommends using Teflon or duct tape to prevent aphids from infesting plants.18 Gardeners often paint tree trunks to prevent insects from boring into them, see Ortho Home Gardener’s Problem Solver 271 (2004), or wrap tree trunks with strips of metal to prevent squirrels from climbing them. Id. at 496. Under the DPR’s expansive interpretation of Section 12753, duct tape, paint, metal strips, and Teflon would qualify as “pesticides” if any nursery employee tells a customer that

18

Flint, supra. - 24 -

they can be used to prevent pest infestation.19 U.C. Davis is currently breeding fusarium-resistant celery, and the USDA’s Agricultural Research Service is developing a potato that is bioresistant to the Columbia Root-knot Nematatode.20 If a product is deemed a pesticide whenever a “pesticidal claim” is made about it, these genetically modified plants would also be subject to the registration requirement. Indeed, in addition to admitting that water would qualify as a pesticide under the DPR’s interpretation of the statute, one DPR official testified below that under his interpretation, plants bred to resist pests would also have to be registered as pesticides. AR 2:871 (“[T]here have been attempts to genetically engineer plants with an insect

19

Neither Section 12993 nor Cal. Code Regs. tit. 3, § 6145(a) distinguishes between retailers and wholesalers; it thus appears that even if a manufacturer makes no “pesticidal claims” about a product, a comment by an employee at a retail store would qualify as a “pesticidal claim” and subject the wholesaler and/or retailer to liability. Indeed, the Hearing Officer based his finding that Hahn had violated the statute in part on a statement by an employee at a retail nursery, over whom Hahn had no control. AR 2:790 n.12 (relying on a handwritten sign in a retail nursery that inaccurately described Worm Gold as a “slug killer” while simultaneously recognizing that “the sign was created in the store, and not by [Hahn].” AR 2:790 n.12.).

20

See Carlos F. Quiros, Univ. of Cal. Coop. Extension, Vegetable Research & Information Center, Development of Fusarium Resistant Celery, available at http://vric.ucdavis.edu/veg_info/fusariumcelery.htm (last visited May 3, 2011); Charles R. Brown, USDA Agricultural Research Service, Scientists Use Old, New Tools to Develop Pest-Resistant Potato (Apr. 2009), available at http://www.ars.usda.gov/is/AR/archive/apr09/potato0409.htm (last visited May 3, 2011). Appellants request that this Court take judicial notice, pursuant to Evidence Code sections 452(g) and (h), of the fact that these organizations have announced that they are breeding pest-resistant forms of these plants. - 25 -

chitinase which went in to protect the plant.” Q: “Now if you’re modifying a product so that it would have this chitinase activity, would that need to be registered as a pesticide?” A: “Well, if that product is being used to mitigate or repel pests, yes, it would be a—it would require pesticide registration.”). If Worm Gold brand fertilizers are subject to DPR control, then all fertilizers or other products which foster plant strength and plants’ normal resistance to pests, or which are advertised as indirectly causing plants to fight off infestation, would also be subject to the registration requirement. This cannot be the proper interpretation of the statute. Worm Gold brand fertilizers are natural plant foods, made of substances found in all normal garden soil, and are marketed for their ability to promote plants’ robustness and capacity to resist infestation. Truthfully saying that a fertilizer can boost a plant’s resiliency against pests cannot transform it into a pesticide for purposes of Section 12753. To hold otherwise would conflict with Worst and “would result in absurd consequences the Legislature did not intend.” Coal. of Concerned Communities, Inc., 34 Cal. 4th at 737. B. The Decision Below Is Contrary to Precedent As noted above, Worst, 57 Cal. App. 2d Supp. at 1031, explicitly rejected the expansive interpretation of “pesticide” that the superior court adopted. Yet although Worst is directly on point, and was briefed extensively below, the superior court failed to cite or address that decision in any way.

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Worst was correctly decided, and the same holding should apply to this case. There is no reason to believe that Section 12753 was intended to prohibit naturally occurring products that simply cause plants to produce a pest-deterring odor—let alone products that are already a natural ingredient of the soil. The purpose of California’s pesticide regulations is to “promot[e] and protect[] the agricultural industry of the state and . . . protect[] . . . the public health, safety, and welfare.” Food & Agric. Code § 3. These purposes are not accomplished by defining as a pesticide a product whose active ingredient is “an odor, and is produced by nature and not by chemicals or other artificial means,” and which “was never represented as being a poison, or as being physically injurious to the [pest], or to be eaten by him, but only as being so obnoxious to [him] . . . as to discourage his presence in the immediate vicinity.” Worst, 57 Cal. App. 2d Supp. at 1031. Unlike gopher purge or worm castings, the products at issue in Leslie’s Pool Mart were pesticides because they are artificial chemicals, 223 Cal. App. 3d at 1530, which were “intended to be used to kill or reduce bacteria or weeds (algae) in swimming pools.” Id. at 1537. The products were specifically marketed as a way of killing bacteria. This distinguishes Leslie’s Pool Mart from Worst and from this case. Here, as in Worst, the products are entirely natural and sold merely as an indirect way of causing pests to avoid an area.

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Worm Gold brand fertilizers also differ from the anti-fire ant product at issue in the Texas case of Turner v. State, 850 S.W.2d 210 (Tex. App. 1993). There, the court of appeals found that the product qualified as a pesticide21 because it “immobilize[d] the ants for a while so that they cannot eat.” Id. at 213. The producer argued that the product’s purpose was only to level ant mounts, but the court concluded that it “kills the fire ants by preventing them from eating and this reaches the same end result as any other pesticide.” Id. at 213. But Worm Gold products do not kill insects, or immobilize them, or prevent them from eating; it simply boosts a plant’s natural capacity to “smell bad” (so to speak) to pests. The superior court’s conclusion that a product that has no direct effect on pests at all qualifies as a pesticide whenever pesticidal claims are made about it is contrary to precedent and would dramatically expand DPR jurisdiction to cover any product that has any ultimate deterrent effect on pests. This is not what the state’s pesticide regulations were intended to accomplish. C. “Pesticidal Claim” Is Not an Element of Any Statute or Regulation and Is an Undefined and Vague Term The trial court held that any product, whatever its nature, is legally deemed a pesticide whenever a “pesticidal claim” is made about it. The term “pesticidal claim,” however, does not appear in any statute, regulation, or case

21

The Texas law’s definition of “pesticide” was virtually identical to California’s in this case. Id. at 214. - 28 -

law in California. Nor does Section 12753 define “pesticide” as anything about which a “pesticidal claim” is made. Rather, it defines a pesticide as a substance or mixture of substances which is “intended to be used for defoliating plants, regulating plant growth, or for preventing, destroying, repelling, or mitigating any pest,” and Section 12993 makes it illegal to “manufacture, deliver, or sell any pesticide or any substance or mixture of substances that is represented to be a pesticide” without first registering that product with the DPR. It would stretch the statutory language to an extreme to hold that a “pesticidal claim” is the same as a “representation” of a pesticide. It is unclear, for example, whether or not the following would qualify as “pesticidal claims”: •

“This grass grows so thick, you won’t get a lot of weeds.”

•

“Use water to spray aphids off of roses.”

•

“If you plant these thorn bushes on your property line, the

neighbor’s dogs will stay out of your yard.” •

“This dog food will make your dog strong and healthy, and a

strong and healthy dog is better able to keep squirrels and other rodents away from your fruit trees.” All of these statements might be “pesticidal claims,” in that they state or imply that a product can, directly or indirectly, result in pest repellency. But

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to interpret the statute so broadly as to declare that grass or thorn bushes or dog food or water qualify as pesticides, simply because a salesperson states that they can, directly or indirectly, deter or repel pests, would be to stretch the statutory language to an unreasonable extreme.

A more reasonable

interpretation of Section 12993 would be to hold that a product is “represented to be a pesticide” when it is marketed on the understanding that the product would directly kill or repel pests of its own accord—not when it is marketed as having indirect or secondary effects that include pest deterrence. D. The Superior Court’s Expansive Interpretation of the Statute Threatens Important First Amendment Rights The decision below construes Sections 12993 and 12753 in a way that prohibits businesses from making truthful claims about their products—a violation of the First Amendment.22 Businesses have the right to communicate truthful, nonmisleading messages about their products. Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 770 (1976). Indeed, the First Amendment protects the right of a business to

22

Appellants raised this constitutional issue in the court below, but the court did not address it. See JA at 47-48. The DPR claimed that Appellants had waived any constitutional challenge to Sections 12753 or 12993 by failing to raise such a challenge in the administrative process. JA at 13. But Appellants are not raising a constitutional challenge to the statute; theirs is a statutory interpretation argument: specifically, that a narrow construction of the statute is required to avoid intruding on constitutional rights. Constitutional arguments like this need not be raised before an administrative agency to be preserved. - 30 -

disseminate truthful information about the “off-label” uses of a product—that is, uses for which required scientific certifications have not been obtained. In re Actimmune Mktg. Litig., 614 F. Supp. 2d 1037, 1051 n.6 (N.D. Cal. 2009). But under the rationale adopted by the superior court, a business violates the law whenever it truthfully and non-misleadingly states that its fertilizer, although not a pesticide, has effects that include pest deterrence. This is not a situation in which the government merely requires approval and certification before a business may use a specialized term to describe a product or service. Those cases are also problematic under the First Amendment, see, e.g., Byrum v. Landreth, 566 F.3d 442, 447 (5th Cir. 2009) (state could not bar interior designers from truthfully describing themselves as “interior designers”), but the superior court’s decision goes even further. According to its decision, Hahn would violate the law any time he makes a truthful, non-misleading statement such as “this product can help keep your plants free from bugs.” Indeed, under the theory adopted below, the law would forbid even such an obviously absurd statement as “you can use this automobile to run over insects and keep them away from your plants” because such a “pesticidal claim” would make the automobile into an unregistered pesticide. Such an interpretation of Sections 12993 and 12753 is not only absurdly extreme, but so broad as to proscribe the publication or utterance of an indefinite number of truthful statements about Worm Gold’s qualities.

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It is no answer to say that the statute renders “pesticidal claims” illegal and therefore removes Hahn’s speech from the protection of the commercial speech doctrine. As the court said in Byrum, when rejecting a similar contention, [t]he State advances a circular argument that the speech inherently tends to mislead consumers. It runs: Texas created a licensing regime; therefore, unlicensed interior designers who refer to themselves as interior designers will confuse consumers who will expect them to be licensed . . . . This argument also proves too much, as it would authorize legislatures to license speech and reduce its constitutional protection by means of the licensing alone. 566 F.3d at 447. Accord, Roberts v. Farrell, 630 F. Supp. 2d 242, 249 (D. Conn. 2009) (Businesses have a First Amendment right “to describe themselves and their work by use of words that . . . accurately describe the professional services that [they] lawfully render to consumers in the State.”). The superior court’s expansive use of the definition of “pesticide” as including any substance which is promoted as deterring pests, or causing plants to resist pests, thus threatens important constitutional freedoms. Courts should, whenever possible, interpret statutes to avoid constitutional problems. Canon v. Justice Court, 61 Cal. 2d 446, 452 n.5 (1964) (“A statute [that may] imping[e] on the right of free speech should be construed no more broadly than is absolutely necessary to accomplish its purposes.”); accord, Welton v. City of Los Angeles, 18 Cal. 3d 497, 505-06 (1976) (“[A] statute or ordinance suffering overbreadth may be construed so - 32 -

as to avoid conflict with the Constitution . . . [and] limit its effect and operation to matters that may be constitutionally regulated or prohibited . . . [and] not create uncertainty inhibiting exercise of a constitutional right.”). It was not necessary for the superior court to adopt the interpretation that any statement indicating pest repellency transforms a fertilizer into a pesticide and thus requires registration and government licensing. Sections 12993 and 12753 are not facially unconstitutional, of course, but those statutes should be construed with reasonable narrowness to avoid infringing on the protected right of businesses to disseminate truthful information about their products. Thus the decision below is erroneous and must be reversed to avoid violating First Amendment rights. E. DPR Should Not Be Allowed to Expand Its Authority Through an Extreme and Unreasonable Interpretation of the Statute This Court should not allow the DPR to stretch its authority to such an extreme. “[A]bsent a clear legislative mandate, in the interest of the wise public policy of avoiding uncalled for and unnecessary regulation in the free market place, courts should exercise judicial restraint and refrain from scratching administrative agencies’ itch to expand their regulatory powers.” Pitney-Bowes, 108 Cal. App. 3d at 321 n.12. In Schneider, the court of appeal rejected the Coastal Commission’s assertion that its statutory authority to regulate property to protect the view “to

- 33 -

and along” the shoreline also gave it power to regulate property that might be seen from a boat at sea. The court explained that while as a matter of grammar, the “view to” the shoreline might be literally read in that way, “it is unreasonable to assume that the Legislature meant to include ocean-based views to the shore when it enacted [the Coastal Act] 30 years ago.” 140 Cal. App. 4th at 1345. The court noted that the authority of administrative agencies should not be expanded without justification, id. at 1348, and concluded that there was no statutory warrant for such an expansive interpretation of the agency’s power. So, too, in Pitney-Bowes, the Department of Food and Agriculture asserted administrative authority over postal scales which were used for determining the cost of postage. 108 Cal. App. 3d at 310. The Department argued that it had statutory authority over “all scales of any kind,” Bus. & Prof. Code § 12210(a), including postage scales. The court of appeal, however, rejected this interpretation as “shak[y].” 108 Cal. App. 3d at 319. Although the statute, read literally, might have granted the Department such power, the statute had to be read in context to effect the Legislature’s reasonable intent, and to avoid overstretching its language. Id. at 313-14. Likewise, here, Sections 12993 and 12753 should be read in context, and reasonably—not with an extreme literalism that would sweep in non-

- 34 -

pesticides, or products about which “pesticidal claims” are made.23 The better reading of those statutes is that a product is “represented” as a pesticide, and thus within DPR jurisdiction, only where it is labeled or marketed as being for direct use in preventing, destroying, or repelling pests. Worm Gold products were not advertised in this way.

Taken in context, the Worm Gold

advertisements made clear that the products worked only indirectly, by boosting a plant’s ability to fight off pest infestations. Only by “cherry picking” out-of-context words and phrases from the advertisements at issue can the DPR contend that Hahn represented Worm Gold as “intended to be used for . . . preventing, destroying, repelling, or mitigating any pest.” See

23

Title 3, section 6145, of the California Code of Regulations does say that a product is a pesticide if a person states or implies that the product should be used as a pesticide, but that regulation cannot be construed as meaning that merely saying that a fertilizer can make plants unattractive to pests converts that fertilizer into a pesticide. Such an interpretation would mean that the regulation was an attempt to expand DPR authority beyond the statutory boundaries. An administrative agency cannot expand its statutory authority by regulation. See Littoral Dev. Co. v. San Francisco Bay Conservation & Dev. Comm’n, 24 Cal. App. 4th 1050, 1058 (1994) (“we are not bound by the agency’s own interpretation of its jurisdiction as specified by legislation, since ‘. . . the courts are the ultimate arbiters of the construction of a statute’ . . . . ‘Administrative regulations that alter or amend the statute or enlarge or impair its scope are void and courts not only may, but it is their obligation to strike down such regulations.’” (citations omitted)); Schneider, 140 Cal. App. 4th at 1343-44 (administrative agencies cannot expand their jurisdiction by redefining statutory terms in regulations). Nor did Hahn’s advertisements state that Worm Gold products should be used as pesticides. They stated that Worm Gold products should be used as fertilizers. - 35 -

infra, Section III. But even these out-of-context statements only declared that Worm Gold would indirectly cause pests to avoid a plant. Hahn does not, of course, contend that Worm Gold products should not be subject to any licensing requirements; they are certainly subject to the licensing and registration requirements applicable to fertilizers, and are already properly licensed. AR 1:477-78, 2:1039-40. There is no danger that a finding that Worm Gold products are not pesticides will create a loophole for dangerous products to be used without proper oversight. Worm castings occur naturally in the environment because they are the feces of worms that inhabit normal soil and have done so since time immemorial. They are not poisonous or dangerous to humans, and a person need not even use gloves when handling them. AR 2:1047-48. Rather, Hahn contends that the superior court erred in concluding that a product is legally deemed a pesticide, regardless of its nature, whenever a person states that it may indirectly result in pest deterrence or repellency. Instead, a product is a pesticide under Section 12753 only when it acts directly on pests to kill or repel them, and is only represented as a pesticide under Section 12993 when the advertisements or statements about the product, taken in context, state that the product directly kills or repels pests. A plant food that is advertised as strengthening a plant’s natural bioresistance mechanisms is not a pesticide. To hold otherwise would lead to extreme and absurd results,

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conflict with Worst and other precedents, would render the law vague and unpredictable, would threaten important constitutional rights, and would expand DPR authority beyond what the Legislature intended. This Court should adopt a narrower, more reasonable reading of the definition of pesticide and reverse the decision of the superior court. III HAHN DID NOT MARKET WORM GOLD BRAND FERTILIZERS AS PESTICIDES An examination of Worm Gold advertisements makes clear that, when considered in context, these advertisements represented Worm Gold products as fertilizers—that could strengthen plants’ natural bioresistance to pests and thereby cause pest avoidance—and not as pesticides. The superior court affirmed the DPR’s finding that Hahn “[made] representations that [Worm Gold] products would ‘repel’ insects and ‘control’ or ‘suppress’ fungus,” and that these were “not merely claims that a stronger and healthier plant is more resilient to pests and disease.” JA at 104. But when read in context, these advertisements made clear that Worm Gold could “suppress” or “control” pests only indirectly, by means of a plant ingesting the products and being thereby strengthened to resist infestation. For example, one advertisement sheet, reprinted in AR 1:371, does state that Worm Gold is “effective in repelling aphids, white fly, and other insects that feed on plants,” and would “not only control, but also suppress . . . difficult plant diseases.” - 37 -

Yet it explains that these effects are the result of the plants’ own invigoration due to being fed Worm Gold fertilizers: “Pure Worm Castings dramatically increases [sic] the level of chitinase producing organisms in plants . . . . Insects are able to detect chitinase and are repelled by the taste.” Id. See also id.: [Worm Gold] make[s] all the nutrients in the soil readily available for plant absorption. The more beneficial organisms, the more nutrients become available more rapidly, and the faster the plant grows. WORMGOLD® can even increase the percentage of chemical fertilizer that is actually absorbed by the plant, via biological organisms that act as nutrient regulators. WG is organic with none of the salts of chemical fertilizers. Another advertisement, at AR 1:171, explicitly stated that use of Worm Gold could lead to “insect repellency, fungus control, and nematode repellency,” but also made clear that these results would spring not from the product itself, but from a plant fed with Worm Gold fertilizer: “Healthy and thriving plants require a vibrant soil food web. High quality worm castings are known as the best means to obtain a healthy soil food web . . . . Poor quality worm castings do NOT give the desired benefits.” Id. The trial court therefore skipped a crucial step. Not every use of words like “repel” or “control” in an advertisement will constitute the sort of “representation” that is prohibited by Food and Agricultural Code section 12993. Where a fertilizer is advertised as indirectly causing pest repellency as the ultimate consequence of a plant ingesting the fertilizer and

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thus becoming strong, the product has not been “represented to be a pesticide.” Hahn’s advertisements, when read in context, make clear that the product was represented as a fertilizer that could have indirect, positive effects in terms of pest repellency. As noted above, the law does not use the term “pesticidal claims,” and gives no definition for this term. The danger of employing such an ambiguous legal standard becomes clear when considering some of the testimony from the administrative hearing. One witness in the proceedings below identified an advertisement as making a “pesticidal claim” on the grounds that “the whole paragraph[] says there are many positive side effects for the tree caused by—there are many positive side effects for the tree caused by a solution.” AR 2:965. Under this definition, all fertilizers would qualify as “pesticides,” because all fertilizers cause positive effects on plants, and those positive effects include helping a plant resist pests. Another witness, DPR investigator Dan Weerasakera, identified another advertisement as making “pesticidal claims” as follows: Q: “. . . what did you find that would lead you to believe that there may be a pesticidal claim?” A: “The first sentence insinuates that, pesticidal claim.” Q: “Would you point out the language for me?” A: “[Quoting from advertisement:] ‘Healthy trees attacked by bark beetles.’ There is a qualified statement that for me

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insinuates this product would make the trees healthy. That is the rest of the sentence.” AR 2:108-09. These statements are typical of the ambiguous and overly broad interpretation of the term “pesticide” adopted by the DPR. To say that a product “would make the trees healthy” is not to identify the product as a pesticide. The distinction between products advertised as the agents of pest repellency and products advertised as strengthening natural bio-resistance is crucial, to avoid sweeping a broad variety of non-pesticide products into the definition of pesticide. The DPR held that “[b]y stating that Worm Gold products prevent[] further growth of pathogens and infection,” that pathogens and pests are “consume[d],” that testing shows “insect repellency” such that “aphids, spider mites, & white flies left” and that “you can repel insects [and] fight fungus problems,” there can be no question that insect control, mitigation, and repellency was touted in a way that makes the products pesticides. AR 2:792. But this language does not claim that Worm Gold brand fertilizers work directly on pests, repelling or killing them. It simply (and truthfully) promotes, in the simplistic language common to pithy advertisements, the fact that Worm Gold brand fertilizers promote a plant’s health and thus its natural capacity to resist pest infestation. For instance, the claim that “aphids, spider mites, & white flies left” plants after the use of Worm Gold products is simply a claim that pests chose to avoid the plants due to the boost in plant health caused by the application of fertilizer. Likewise, the DPR contended that - 40 -

Hahn advertised Worm Gold brand fertilizers as “suppress[ing] pathogens . . . repel[ling] harmful insects but no[t] beneficial insects, and allow[ing] plants and trees to thrive in adverse conditions,” and as “causing bark beetles to avoid and not attack trees.”

AR 1:4-5.

But when viewed in context, the

advertisement from which these quotes are drawn—AR 1:371—makes clear that these benefits are indirect consequences of a plant’s ingestion of Worm Gold fertilizers: Worm Castings have been known for over 100 years as the best possible soil amendment to grow better plants . . . . [A] specific controlled feed would yield castings that 1. Improve plant growth and soil food web conditions, 2. Repel harmful insects, but not beneficial insects, 3. Control diseases caused by unfriendly fungus and bacteria . . . . [W]orm castings (when used with a quality compost) improve the health of plants. Id. It is only by cherry-picking from the advertisements and ignoring the other language in them that the DPR could contend that they advertise Worm Gold products as pesticides. Taken in context, these statements are merely truthful claims that Worm Gold, when used as a fertilizer and fed to plants, can make plants healthy and thus resistant to pests. A product that “allows plants and trees to thrive in adverse conditions” is a fertilizer, not a pesticide. The superior court therefore erred in concluding that Worm Gold brand fertilizers were advertised as pesticides, when in fact they were advertised as plant foods that improved plants’ natural resistance to infestation. By adopting

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the prejudicially vague concept of “pesticidal claims,” the decision below incorporated a fundamental, and reversible error. A better standard would be to interpret “represented to be a pesticide” as meaning that the product in question was sold to the general public on the understanding that the product would directly kill or repel pests of its own accord. Pesticides are generally understood to be products that operate directly on pests to deter or to kill them, not as products that act as nutrients to plants, which ultimately results in a pest-deterring effect. Worm Gold products were consistently sold to the public as plant foods or fertilizers which could ultimately cause plants to resist pest infestation. They were never marketed as products that directly injured or repelled or killed pests of their own accord. CONCLUSION The decision of the superior court should be reversed, and judgment entered for Plaintiffs. DATED: May 6, 2011. Respectfully submitted, DEBORAH J. LA FETRA TIMOTHY SANDEFUR BRANDON M. MIDDLETON Pacific Legal Foundation

By ____________________________ TIMOTHY SANDEFUR Attorneys for Plaintiffs and Appellants - 42 -

CERTIFICATE OF COMPLIANCE Pursuant to California Rule of Court 8.204(c)(1), I hereby certify that the foregoing APPELLANTS’ OPENING BRIEF is proportionately spaced, has a typeface of 13 points or more, and contains 10,253 words. DATED: May 6, 2011.

_______________________________ TIMOTHY SANDEFUR

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DECLARATION OF SERVICE I, Barbara A. Siebert, declare as follows: I am a resident of the State of California, residing or employed in Sacramento, California. I am over the age of 18 years and am not a party to the above-entitled action. My business address is 3900 Lennane Drive, Suite 200, Sacramento, California 95834. On May 6, 2011, true copies of APPELLANTS’ OPENING BRIEF were placed in envelopes addressed to: G. LYNN THORPE Deputy Attorney General State of California Department of Justice 1300 “I” Street, Suite 125 P.O. Box 944255 Sacramento, CA 94244-2550 Counsel for Defendant and Respondent COURT CLERK Sacramento County Superior Court Gordon D. Schaber Courthouse 720 Ninth Street Sacramento, CA 95814 COURT CLERK (4 Copies) Supreme Court of California 350 McAllister Street San Francisco, CA 94102-4797 which envelopes, with postage thereon fully prepaid, were then sealed and deposited in a mailbox regularly maintained by the United States Postal Service in Sacramento, California.

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I declare under penalty of perjury that the foregoing is true and correct and that this declaration was executed this 6th day of May, 2011, at Sacramento, California.

_______________________________ BARBARA A. SIEBERT

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