New York state's highest court scheduled to hear bid by city lawyers to reverse judge's decision striking down city's efforts to cap size of sugary drinks sold in restaurants, movie theaters, stadiums and arenas to 16 oz./cup

Nevin Barich

NEW YORK , June 4, 2014 (Bloomberg LP) – Beverage and trade groups whose members include Coca-Cola Co. are set to make what may be their final argument against New York’s effort to cap the size of sugary drinks sold in restaurants, movie theaters, stadiums and arenas to 16 ounces a cup.

The state’s highest court is scheduled to hear a bid by city lawyers today to reverse a judge’s decision striking down the rule. The $76 billion U.S. soft drink industry is watching the case along with similar initiatives, including a California proposal that would require warning labels on soda and other sweetened beverages, similar to those on cigarettes and alcohol.

“The industry is dealing with a number of challenges right now and it is working quickly to innovate with new sweeteners and new natural sweeteners but I think that, certainly, proposals like the New York City proposal concern the industry,” said John Sicher, editor and publisher of Beverage Digest, a trade newsletter.

U.S. soda consumption has declined during the past nine years as consumers turned to healthier options and a growing array of choices, according to Beverage Digest.

The so-called “portion cap” on soda sizes was proposed by former New York Mayor Michael Bloomberg’s administration, which made public health a focal point of his three terms in office, when smoking was outlawed in bars and restaurants, artery- clogging trans fats were banned from eateries and chain establishments were forced to list calorie counts of items on their menus.

HEALTH INITIATIVES

Bill De Blasio, sworn in as mayor in January, has embraced Bloomberg’s health initiatives, including the limit on soda sizes, and hired Bloomberg administration veteran Mary Bassett to head the city’s Department of Health and Mental Hygiene less than a month after taking office.

As deputy commissioner of health promotion and disease prevention, Bassett led the efforts to ban smoking in bars and restaurants, outlaw trans fats and list the calories of menu items at chain eateries.

“I was honored to be one of the first city council sponsors of the smoking ban for bars and restaurants, so it is only fitting that we’ve reached out to someone who was one of the architects of these successful policies,” De Blasio said while announcing Basset’s appointment in January.

RISING OBESITY

Bloomberg first proposed his plan in May 2012 as an amendment to the city’s Health Code to address rising obesity rates. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.

Despite calls from some to bring the proposal to a vote before the City Council, the Board of Health approved the plan unanimously in September. The American Beverage Association, whose members include Atlanta-based Coca-Cola, the National Restaurant Association, the National Association of Theatre Owners of New York State and other groups sued a month later, saying the rule interfered with consumers’ ability to make their own choices.

New York State Supreme Court Justice Milton Tingling issued a permanent injunction blocking the plan a day before it was scheduled to take effect in March 2013, saying it was “arbitrary and capricious” because it excludes certain businesses - such as convenience stores - that are regulated by the state and doesn’t apply to other beverages with high concentrations of sugar and calories, like fruit juices.

An appeals court in Manhattan upheld Tingling’s ruling in July, saying the Board of Health -- a panel of experts that oversees the city’s health code -- exceeded its authority in approving the restrictions.

The city said in legal papers filed in advance of today’s arguments that opponents of the plan are trying to make the case about “individual liberty” and avoid the fact that sugary beverages are linked to an obesity epidemic.

SWEET PROFIT

“The reality is that petitioners simply do not like this measure,” Fay Ng, a city attorney, said in the filing. “They want to continue to sell sugary drinks in increasingly larger containers because this practice, while posing a clear health risk to their consumers, is profitable.”

The opponents say only the city council or the state legislature, which rejected other proposals to regulate sugary beverages, have the authority to enact such a ban.

Upholding the ban would give the mayor and the Board of Health the authority to make laws on “nearly every aspect of human activity” in the city on the basis that they have public health implications, the opponents said, calling the plan an “unprecendented gambit to coerce New Yorkers into living defendants’ vision of a healthier lifestyle.”

The case is New York Statewide Coalition of Hispanic Chambers of Commerce v. New York City Department of Health and Mental Hygiene, 653584/2012, New York State Supreme Court, New York County (Manhattan).

--With assistance from Henry Goldman in New York and Duane D. Stanford in Atlanta.

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Joe Schneider, Fred Strasser

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