When the 32-ounce Big Gulp® drink was introduced in 1976, it was the biggest fountain soft drink on the market. Twelve years later, 7-Eleven introduced the giant 64-ounce Double Gulp® beverage, at that time one of the biggest fountain soft drinks on the market. In 2012, the Double Gulp drink shrunk to 50 ounces because consumers wanted the large cup to better fit into a “vehicle-sized” cup holder.
When the 32-ounce Big Gulp® drink was introduced in 1976, it was the biggest fountain soft drink on the market. Twelve years later, 7-Eleven introduced the giant 64-ounce Double Gulp® beverage, at that time one of the biggest fountain soft drinks on the market. In 2012, the Double Gulp drink shrunk to 50 ounces because consumers wanted the large cup to better fit into a “vehicle-sized” cup holder. (John Angelillo/Newscon)

ALBANY— New York City’s restriction on the sale of large sugary drinks was thrown out this morning by the state Court of Appeals in a decision that found the Board of Health overstepped its authority and intruded on the lawmaking province of the City Council.

The court’s 4-2 decision affirmed the Appellate Division, First Department, as well as Manhattan Supreme Court Justice Milton Tingling Jr., and shot down on separation of powers grounds a key anti-obesity initiative of former Mayor Michael Bloomberg.

Judge Eugene Pigott Jr. (See Profile), writing for the majority in Matter of New York Statewide Coalition of Hispanic Chambers of Commerce v. New York City Department of Health and Mental Hygiene, 134., stressed that the health board’s “role is regulation, not legislation,” but articulated a flexible standard for deciding when an administrative action amounts to making rather than carrying out policy.

Judge Susan Philips Read (See profile), in a dissent joined by Chief Judge Jonathan Lippman (See Profile), complained that the majority “misapprehends, mischaracterizes and thereby curtails the powers of the New York City Board of Health to address the public health threats of the early 21st century.”

The controversy began in 2012 when Bloomberg proposed amending the city health code to address the sale of sugary drinks. Fourteen members of the City Council wrote to the mayor in opposition, insisting that the proposal be presented to the council for a vote.

Instead, the Board of Health adopted a rule that limited the serving size of non-diet sodas, sweetened tea and coffee, sports and energy drinks, hot chocolate and sweetened juices. The ban, which applied to restaurants, delis, movie theaters and stadiums, but not groceries or convenience stores, excluded milkshakes, 100 percent fruit juices, alcoholic beverages and fruit smoothies.

Six labor unions and not-for-profit associations challenged the so-called “portion cap rule,” relying on the court’s landmark 1987 opinion in Boreali v. Axelrod, 71 NY2d 1, which struck indoor smoking regulations that had been adopted by the state Public Health Council. The plaintiffs prevailed at the trial level and in both state appellate courts.

In Thursday’s majority decision, Pigott parsed the language of Boreali and applied to the portion cap case the four criteria embraced in the 1987 opinion: whether the agency balanced the competing public health and economic factors in adopting the rule; whether the rules were created without legislative guidance; whether the challenged rule governs an issue that the legislature has repeatedly sought to address; and whether the development of the rule required an expertise beyond that of the legislature.

Pigott said that while the Boreali factors were not “rigid conditions,” they do provide the framework for drawing a line between making new policy and carrying out preexisting legislative policy. Here, he said, the Board of Health crossed that line and encroached on the City Council’s sphere of influence.

The court rejected the city’s reasoning that since the Board of Health was created by the state Legislature, it has legislative powers distinct from those of the City Council. It found nothing in the City Charter suggesting that the Board of Health had the power to create laws.

The judges were also unimpressed with the fact that the portion cap rule restricted but did not entirely ban high sugar drinks, concluding that in itself evidenced a policy choice that the Board of Health was not empowered to make.

“Instead of an outright ban on sugary beverages, the board decided to reduce their consumption by the expedient of limiting maximum container size, thus making it less convenient for consumers to exceed recommended limits,” Pigott wrote. “The more cautious approach, however, does not save the Portion Cap Rule.”

Pigott said that the Board of Health, by “making it inconvenient but not impossible, to purchase more than 16 fluid ounces of a sugary beverage while dining at a food service establishment,” made a public policy choice to go that route rather than to, for instance, post health warnings on containers or near vending machines.

“An agency that adopts a regulation, such as the portion cap rule or an outright prohibition on sugary beverages, that interferes with commonplace daily activities preferred by large numbers of people must necessarily wrestle with complex value judgments concerning personal autonomy and economics,” Pigott wrote. “That is policy-making, not rule-making.”

Pigott was joined by judges Victoria Graffeo (See Profile), Robert Smith (See Profile) and Sheila Abdus-Salaam (See Profile), who wrote a brief separate concurrence “to emphasize the carefully circumscribed nature of the court’s decision.”

Abdus-Salaam stressed that, contrary to Read’s dissent, she did not view the majority decision as establishing “any rigid decisional framework to be applied mechanically” to the actions of the Board of Health and other administrative agencies.

“[N]o one should read today’s decision too broadly,” Abdus-Salaam cautioned. “We simply concluded that, under the circumstances of this case, the board ran afoul of separation of powers principles by creating the portion cap rule.”

Read’s dissent, which at 26 pages is longer than the main opinion and concurrence combined, bemoaned the “unhappy result” of the case. She argued that the board’s authority was directly derived from the state Legislature, and consequently its regulations had the effect and force of state law.

“The majority essentially argues that it cannot be true that the board may act independently of the council in the area of public health because, otherwise, what would happen if ‘the board … pass[ed] a health law that directly conflicted with a local law of the City Council?’ The answer is simple: if a regulation promulgated by the board in the Health Code conflicts in some way with a local law, the board’s action trumps the council’s,” Read wrote.

Read said that while her “colleagues in the majority may be troubled by this state of affairs, it was not their proper role to change it.”

Richard Bress, a Washington, D.C., partner at Latham & Watkins, argued the appeal for the plaintiffs and was assisted by his partners, William Rawson in Washington and James Brandt in Manhattan. Bress was unavailable for comment Thursday.

The city was represented by Assistant Corporation Counsel Richard Dearing.

Corporation Counsel Zachary Carter issued a statement that the city was disappointed in the ruling: “We feel that this initiative was a valid exercise of the Board of Health’s authority,” the statement said. “Given the magnitude of this epidemic, we have no doubt that the board will continue to address the obesity crisis and the role of over-consumption of sugary drinks.”

Mayor Bill de Blasio said in a press release that his administration was “extremely disappointed” with the decision and will consider other ways to address the “epidemic” of obesity and diabetes.

“The negative effects of sugary drink over-consumption on New Yorkers’ health, particularly among low-income communities, are irrefutable,” de Blasio said. “We cannot turn our backs on the high rates of obesity and diabetes that adversely impact the lives of so many of our residents.”

Mary Bassett, the city’s health commissioner, said the ruling “does not change the fact that sugary drink consumption is a key driver of the obesity epidemic, and we will continue to look for ways to stem the twin epidemics of obesity and type 2 diabetes by seeking to limit the pernicious effects of aggressive and predatory marketing of sugary drinks and unhealthy foods.”

The American Beverage Association said it was pleased that the lower courts’ decisions were not overturned.

“It would have created an uneven playing field for thousands of small businesses in the city and limited New Yorkers’ freedom of choice,” the association said in a statement. “With this ruling behind us, we look forward to collaborating with city leaders on solutions that will have a meaningful and lasting impact on New Yorkers and families across the country.”