PHOENIX — A Tucson restaurant owner is legally entitled to challenge new state regulations that require the more humane treatment of laying hens.
Grant Krueger is affected by the state rules, Maricopa County Superior Court Judge Scott Blaney ruled Wednesday. Krueger, as the owner of three restaurants, is not just an average consumer who might be out only a few dollars a year as the owners of egg ranches face higher costs to comply, costs that could be passed on to customers, the judge said.
“The rule in question will have material impact on the price of eggs that plaintiffs purchase,” Blaney said of Krueger’s claim in allowing him to sue on his own behalf also in the name of the three restaurants he owns: Union Public House, Reforma Modern Mexican Mezcal + Tequila, and Proof Artisanal Pizza and Pasta.
And the judge said that Krueger is entitled to prove he, the restaurants — and their customers — “will suffer quantifiable economic harm as a direct result of the rule.”
But Blaney also made it clear he’s going to require Krueger to present facts about all this and make his case in court. The judge refused his request to simply declare the rules invalid.
That paves the way for a trial. No date has been set.
At the heart of the legal fight are rules the state Department of Agriculture enacted in 2022 that now spell out that eggs sold in Arizona must be raised in cages no smaller than one square foot of floor space — 144 square inches — per hen. That is twice as much as prior standard.
And, beginning in January, those regulations say all laying hens must be “housed in a cage-free manner.”
In adopting the regulations, the state agency figured the rules would add somewhere between a penny and 3.25 cents per egg. Using an estimate of annual per capita consumption of slightly more than 270 eggs a year, that pencils out to somewhere between $2.71 and $8.79 per person.
But Krueger, in filing suit, said he’s not just an average consumer.
He said he purchased 578 cases of eggs in a recent 12-month period, or 104,400 eggs. And, using the higher estimate, that would cost $3,380 a year.
What Krueger and his attorneys at the Goldwater Institute now have to prove is those financial damages. And that is what both sides will present to Blaney.
Assistant Attorney General Joshua Whitaker contends there’s really no hard evidence to show that the price of eggs actually has been affected by the rules. And even if there are higher costs to producer and retailers, he said it is possible they are simply absorbing the costs and not passing them along to consumers.
There’s also the fact that those rules affect only entities that have more than 20,000 egg-laying hens.
In court filings, Whitaker pointed out there are only two firms in Arizona that meet that requirement: Rose Acre Farms and Hickman’s Family Farms. And he said the first already has cage-free practices and the other is headed in that direction.
What that means, Whitaker said, is that if there is any financial effect on Krueger and his restaurants it may be because of the actions of these firms on their own — and not the rules.
Attorney John Thorpe who is representing Krueger has another legal theory, above and beyond the actual cost to his client: free choice.
“People have a right to buy and sell products,” he said at a court hearing earlier this year. “And when that right is infringed by regulation, when they directly denied the right to sell something, they have the right to challenge that restriction in court.’’
He pointed out that the rules govern not just Arizona-based producers but also out-of-state operations with more than 20,000 hens that want to sell their eggs here, further restricting the availability of what he said are lower-cost eggs from hens in cages.
“That’s a direct restriction on producers, on consumers, certainly on retailers that sell the eggs,’’ Thorpe said.
“It simply says you have no right to buy or sell these products unless they conform with this regulation,’’ he continued. “So Mr. Krueger and his business are both being denied the right to buy and sell something they could previously have bought and sold.’’
Thorpe contends there is precedent for that argument.
He cited a federal court ruling which found that consumers had the right to sue the U.S. Food and Drug Administration after the federal agency enacted regulations on the sale of raw milk. Thorpe said the court in that case said they had purchased the product and that it’s sale was being restricted.
Whitaker, however, said there’s a key difference here. He said it’s not like the regulation will keep Krueger from buying eggs.
“What’s happening is that, at most, the options of buying eggs that come from a particular type of housed hen will be less available,’’ Whitaker said.
He also told the judge that there is clear authority for state agencies to enact restrictions on what consumers can buy, citing, for example, health department regulations about food preparers.
And Whitaker has another legal theory: the regulations actually might be saving money for consumers.
That’s based on the fact that a group known as World Animal Protection in 2021 was promoting a ballot initiative to require cage-free eggs by May 2023. That measure also would have made violations a crime.
Whitaker said the action by the Department of Agriculture sidelined the initiative effort, its more immediate effect and its harsher penalties. He argued that enacting the rules could be seen as actually saving money for producers — and, ultimately, consumers — because the delayed effective date gave more time to comply.
