                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


DANIELS SHARPSMART, INC., a             No. 17-16424
Delaware corporation,
                  Plaintiff-Appellee,      D.C. No.
                                        1:17-cv-00403-
                 v.                        LJO-SAB

KAREN SMITH, Director of the
California Department of Public           OPINION
Health, in her official capacity;
RICHARD PILORIN, Chief of the
Emergency, Restoration and Waste
Management Section of the
California Department of Public
Health, in his personal capacity;
ALISON DABNEY, Chief Senior
Environmental Scientist for the
Medical Waste Management
Program of the California
Department of Public Health, in her
personal capacity; GINGER HILTON,
Environmental Scientist for the
Medical Waste Management
Program of the California
Department of Public Health, in her
personal capacity,
               Defendants-Appellants.
2               DANIELS SHARPSMART V. SMITH

       Appeal from the United States District Court
          for the Eastern District of California
    Lawrence J. O’Neill, Chief District Judge, Presiding

             Argued and Submitted April 11, 2018
                  San Francisco, California

                         Filed May 2, 2018

    Before: Sidney R. Thomas, Chief Judge, Ferdinand F.
      Fernandez and Ronald M. Gould, Circuit Judges.

                   Opinion by Judge Fernandez


                            SUMMARY*


       Preliminary Injunction / Qualified Immunity

    The panel affirmed the district court’s grant of a
preliminary injunction enjoining California Department of
Public Health officials from enforcing the California Medical
Waste Management Act (“MWMA”) against Daniels
Sharpsmart, Inc., and reversed the denial of Department
officials’ motion to dismiss on the basis of qualified
immunity.

    The panel held that Daniels will likely succeed on the
merits of its claim that the Department officials’ application
of the MWMA constituted a per se violation of the dormant

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
              DANIELS SHARPSMART V. SMITH                   3

Commerce Clause. The panel affirmed the district court’s
decision that Daniels was likely to succeed on its claim that
California cannot reach out and impose its notions of the
proper way to dispose of medical waste upon those who are
conducting disposal activities in other states in accordance
with the laws of those states. The panel concluded that the
district court did not abuse its discretion when it issued the
preliminary injunction.

    The panel held that the doctrine of qualified immunity
protected Department officials Richard Pilorin, Alison
Dabney, and Ginger Hilton from damages liability where
Daniels’ constitutional rights under the dormant Commerce
Clause were not clearly established at the time of the
violation.


                        COUNSEL

Renu R. George (argued) and Karli Eisenberg, Deputy
Attorneys General; Ismael A. Castro, Supervising Deputy
Attorney General; Julie Weng-Guetierrez, Senior Assistant
Attorney General; Xavier Becerra, Attorney General; Office
of the Attorney General, Sacramento, California; for
Defendants-Appellants.

Jason Levin (argued), Steptoe & Johnson LLP, Los Angeles,
California; Douglas D. Janicik, Phoenix, Arizona; for
Plaintiff-Appellee.
4                 DANIELS SHARPSMART V. SMITH

                              OPINION

FERNANDEZ, Circuit Judge:

    California Department of Public Health1 officials, Karen
Smith,2 Richard Pilorin,3 Alison Dabney,4 and Ginger Hilton5
(collectively “the Department officials”) appeal the district
court’s grant of a preliminary injunction against them in favor
of Daniels Sharpsmart, Inc. (“Daniels”) and the denial of their
motion to dismiss on the basis of qualified immunity.6 The
preliminary injunction enjoined the Department officials from
enforcing the California Medical Waste Management Act
(“MWMA”)7 against Daniels for the manner in which it
disposed of medical waste at facilities outside of the State of
California. In its action against the Department officials,8
Daniels alleged that they violated its constitutional rights


    1
        Hereafter, “the Department.”
    2
        Karen Smith was the Director of the Department.
    3
      Richard Pilorin was the Chief of the Department’s Emergency,
Restoration, and Waste Management Section.
    4
     Alison Dabney was the Chief Senior Environmental Scientist for the
Department’s Medical Waste Management Program.
    5
    Ginger Hilton was an Environmental Scientist for the Department’s
Medical Waste Management Program.
    6
     Karen Smith was sued in her official capacity. All other Defendants
were sued in their personal capacities.
    7
        See Cal. Health & Safety Code §§ 117600–118360.
    8
        42 U.S.C. § 1983.
                   DANIELS SHARPSMART V. SMITH                 5

under the dormant Commerce Clause9 when they engaged in
extraterritorial enforcement of the MWMA. The Department
officials also appeal the district court’s denial of their motion
to dismiss on the basis of qualified immunity. We affirm the
grant of the preliminary injunction, but reverse the denial of
qualified immunity.

                              BACKGROUND

    Daniels is an Illinois based corporation that designs,
develops, manufactures, markets, and sells reusable sharps
container systems for the disposal of needle-inclusive
biohazardous medical products. Those medical products
include waste syringes, blood collection devices, and IVs.
Daniels also handles the transport and treatment of the
medical waste. In California, that waste is handled by
Daniels’ Medical Waste Treatment Facility and Transfer
Station in Fresno. As a medical waste treatment facility in
California, it is subject to regulation under California’s
MWMA. Therefore, when it received its medical waste
treatment facility and transfer station permit from the
Department, Daniels agreed to “comply with all applicable
provisions of the Medical Waste Management Act.” Daniels
also agreed to operate its facility in conformance with the
plans approved by the Department.

    In general, under the MWMA, California-generated
medical waste must be incinerated. See Cal. Health & Safety
Code § 118215(a)(1)(A), (a)(3)(A). Furthermore, “[m]edical
waste transported out of state shall be consigned to a
permitted medical waste treatment facility in the receiving
state.” Id. § 118000(c).

    9
        U.S. Const. art. I, § 8, cl. 3.
6               DANIELS SHARPSMART V. SMITH

   As of 2014, there were no locations within the State of
California that had incinerators to treat Daniels’ biohazardous
medical waste.10 Consequently, Daniels transported the waste
from the Fresno facility to other states. For some time,
Daniels had the waste incinerated at a facility in Baltimore,
Maryland.

    However, in 2014, Daniels decided to transport its
medical waste to locations in Kentucky and Indiana, where
the waste would be treated by means other than incineration
which were consistent with those states’ regulations. In
Kentucky, the waste was treated by a method called
autoclave, while in Indiana the waste was treated by a
technique known as thermal deactivation. Treating the waste
in Indiana and Kentucky was more cost effective for Daniels
than having the waste incinerated in some other state. From
September 11, 2014, to December 1, 2014, Daniels
transported roughly 320,000 pounds of medical waste to
facilities in Indiana and Kentucky. After a November 20,
2014, inspection of Daniels’ facility in Fresno, California, the
Department, through Hilton, told Daniels that all
biohazardous medical waste originating in California must be
treated by incineration, even if the law of another state
permitted an alternative method. The Department further
indicated that Daniels would be penalized if it did not
incinerate all of its biohazardous medical waste. Daniels
responded that the Department could not dictate the method
by which Daniels treated the waste outside of California.

    On April 10, 2015, the Department conducted another
inspection of Daniels’ facility, and Daniels received a letter

    10
       That medical waste contained trace chemotherapy, pathology, and
pharmaceutical waste.
              DANIELS SHARPSMART V. SMITH                      7

from Hilton, which stated that California law governed
Daniels’ treatment of medical waste in other states. Then, on
August 10, 2015, the Department issued a notice of violation
to Daniels for using methods other than incineration to treat
its biohazardous medical waste outside of California. The
notice imposed a $618,000 penalty for the 618 violations of
law it identified. In order to avoid further penalties, Daniels
began transporting its medical waste to incinerators located
in other states, at a significantly higher cost to Daniels.

    In addition, Daniels filed a complaint in the district court,
and alleged that the Department officials violated the dormant
Commerce Clause by their extraterritorial application of the
MWMA. Daniels then filed a motion for preliminary
injunction, and the Department officials, claiming entitlement
to qualified immunity, filed a motion to dismiss.

    The district court granted Daniels’ motion for a
preliminary injunction and denied the Department officials’
motion to dismiss. This appeal followed.

    JURISDICTION AND STANDARDS OF REVIEW

    “We have jurisdiction to review the district court’s grant
of a preliminary injunction.” Meredith v. Oregon, 321 F.3d
807, 811 (9th Cir. 2003); see also 28 U.S.C. § 1292(a)(1).
Furthermore, “an order denying qualified immunity is
immediately appealable.” Wilkinson v. Torres, 610 F.3d 546,
549–50 (9th Cir. 2010). “Our jurisdiction to review an
interlocutory appeal of a denial of qualified immunity,
however, is limited exclusively to questions of law.” Id. at
550.
8             DANIELS SHARPSMART V. SMITH

    We review the district court’s decision to grant a
preliminary injunction for abuse of discretion. Associated
Press v. Otter, 682 F.3d 821, 824 (9th Cir. 2012). Moreover:

       In deciding whether the district court has
       abused its discretion, we employ a two-part
       test: first, we “determine de novo whether the
       trial court identified the correct legal rule to
       apply to the relief requested”; second, we
       determine “if the district court’s application of
       the correct legal standard was . . . illogical, . . .
       implausible, or . . . without support in
       inferences that may be drawn from the facts in
       the record.”

Id. (citation omitted); see also United States v. Hinkson,
585 F.3d 1247, 1261–63 (9th Cir. 2009) (en banc). A district
court abuses its discretion if it bases a decision “on an
erroneous legal standard or a clearly erroneous finding of
fact.” Associated Press, 682 F.3d at 824 (citation omitted).
“We review a denial of qualified immunity de novo.”
Wilkinson, 610 F.3d at 550.

                        DISCUSSION

    Daniels asserts that the Department officials, not content
with exercising their authority in California, have reached out
in an attempt to control how other states handle and allow the
disposal of medical waste within their borders. The district
court agreed with that assessment, as do we. If permitted,
that kind of action would attack the cement that holds this
nation together. As the Supreme Court has said:
              DANIELS SHARPSMART V. SMITH                     9

            The Commerce Clause provides that
        “[t]he Congress shall have Power . . . [t]o
        regulate Commerce . . . among the several
        States.” Though phrased as a grant of
        regulatory power to Congress, the Clause has
        long been understood to have a “negative”
        aspect that denies the States the power
        unjustifiably to discriminate against or burden
        the interstate flow of articles of commerce.
        The Framers granted Congress plenary
        authority over interstate commerce in “the
        conviction that in order to succeed, the new
        Union would have to avoid the tendencies
        toward economic Balkanization that had
        plagued relations among the Colonies and
        later among the States under the Articles of
        Confederation.” “This principle that our
        economic unit is the Nation, which alone has
        the gamut of powers necessary to control of
        the economy, . . . has as its corollary that the
        states are not separable economic units.”

Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality of State of Or.,
511 U.S. 93, 98–99, 114 S. Ct. 1345, 1349, 128 L. Ed. 2d 13
(1994) (alterations in the original) (citations omitted).

    The negative aspect—commonly known as the dormant
Commerce Clause—has at least two emanations. The Court
has pointed out that “[w]hen a state statute directly regulates
or discriminates against interstate commerce, or when its
effect is to favor in-state economic interests over out-of-state
interests, we have generally struck down the statute without
further inquiry.” Brown-Forman Distillers Corp. v. N.Y.
State Liquor Auth., 476 U.S. 573, 579, 106 S. Ct. 2080, 2084,
10              DANIELS SHARPSMART V. SMITH

90 L. Ed. 2d 552 (1986). While many cases deal with the
discrimination emanation,11 this case deals with the direct
regulation emanation. “Direct regulation occurs when a state
law directly affects transactions that take place across state
lines or entirely outside of the state’s borders.” S.D. Myers,
Inc. v. City & County of San Francisco, 253 F.3d 461, 467
(9th Cir. 2001) (citation omitted). As the Court has put it:
“the ‘Commerce Clause . . . precludes the application of a
state statute to commerce that takes place wholly outside of
the State’s borders, whether or not the commerce has effects
within the State.’” Healy v. Beer Inst., 491 U.S. 324, 336,
109 S. Ct. 2491, 2499, 105 L. Ed. 2d 275 (1989). Indeed,

         [A] statute that directly controls commerce
         occurring wholly outside the boundaries of a
         State exceeds the inherent limits of the
         enacting State’s authority and is invalid
         regardless of whether the statute’s
         extraterritorial reach was intended by the
         legislature. The critical inquiry is whether the
         practical effect of the regulation is to control
         conduct beyond the boundaries of the State.

Id. Moreover, the Court further pointed out that:

         [T]he practical effect of the statute must be
         evaluated not only by considering the
         consequences of the statute itself, but also by
         considering how the challenged statute may
         interact with the legitimate regulatory regimes
         of other States and what effect would arise if

    11
       See, e.g., Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 337–38,
128 S. Ct. 1801, 1808, 170 L. Ed. 2d 685 (2008).
               DANIELS SHARPSMART V. SMITH                      11

         not one, but many or every, State adopted
         similar legislation.

Id.

    We will apply these general principles to the issues raised
in this case.

      A. The Preliminary Injunction

    “A plaintiff seeking a preliminary injunction must
establish that he is likely to succeed on the merits, that he is
likely to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and that an
injunction is in the public interest.” Winter v. Nat. Res. Def.
Council, Inc., 555 U.S. 7, 20, 129 S. Ct. 365, 374, 172 L. Ed.
2d 249 (2008). We have explained that the first and third of
the factors interact so that “‘serious questions going to the
merits’ and a balance of hardships that tips sharply towards
the plaintiff can support issuance of a preliminary injunction,
so long as the plaintiff also shows that there is a likelihood of
irreparable injury and that the injunction is in the public
interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127,
1135 (9th Cir. 2011). The Department officials do not contest
the district court’s determinations regarding the balance of
equities, irreparable injury, and public interest factors, but do
insist that Daniels is not likely to succeed on the merits. In
short, they essentially state that because it is plain that there
was no redressable constitutional violation, Daniels cannot
succeed. In that they are plainly incorrect.

    The parties do not dispute that a Commerce Clause action
can be brought by an individual pursuant to 42 U.S.C. § 1983.
See Dennis v. Higgins, 498 U.S. 439, 446–47, 111 S. Ct. 865,
12            DANIELS SHARPSMART V. SMITH

870–71, 112 L. Ed. 2d 969 (1991). Thus, we need only
consider whether Daniels is likely to succeed on the merits
under the facts and circumstances of this case. It is. We are
not concerned here with an attempt by the Department
officials to protect California and its residents by applying the
MWMA to products that are brought into or are otherwise
within the borders of the State. See, e.g., Rocky Mountain
Farmers Union v. Corey, 730 F.3d 1070, 1103–04 (9th Cir.
2013); Ass’n des Eleveurs de Canards et d’Oies du Quebec
v. Harris, 729 F.3d 937, 949 (9th Cir. 2013); Valley Bank of
Nev. v. Plus Sys., Inc., 914 F.2d 1186, 1192–93 (9th Cir.
1990). Rather, we are faced with an attempt to reach beyond
the borders of California and control transactions that occur
wholly outside of the State after the material in question—
medical waste—has been removed from the State.

    The mere fact that some nexus to a state exists will not
justify regulation of wholly out-of-state transactions. For
example, an attempt by California to regulate the terms and
conditions of sales of artworks outside of California simply
because the seller resided in California was a violation of the
dormant Commerce Clause. Sam Francis Found. v.
Christies, Inc., 784 F.3d 1320, 1322 (9th Cir. 2015) (en
banc). As we said, the statute in question “directly regulates
the conduct of the seller or the seller’s agent for a transaction
that occurs wholly outside the State.” Id. at 1324. That could
not be countenanced and “[w]e easily conclude[d] that the
royalty requirement, as applied to out-of-state sales by
California residents, violates the dormant Commerce Clause.”
Id. at 1323. One state cannot be permitted to dictate what
other states must do within their own borders.

   Over twenty years earlier, we reached a similar
conclusion in a quite different factual setting, but for the
                  DANIELS SHARPSMART V. SMITH                  13

selfsame reasons. See NCAA v. Miller, 10 F.3d 633, 635 (9th
Cir. 1993). There, the State of Nevada sought to impose rules
of procedure that would in effect control proceedings in other
states, even if those states did not impose the same
restrictions on procedures and could even prescribe other
rules. Id. at 639. As we then declared: “the Statute could
control the regulation of the integrity of a product in interstate
commerce that occurs wholly outside Nevada’s borders. That
sort of extraterritorial effect is forbidden by the Commerce
Clause.” Id. Moreover, the Nevada statute could have had
the baleful effect of subjecting businesses to conflicting
requirements. Id.; see also Healy, 491 U.S. at 336–37, 109
S. Ct. at 2499 (“[T]he Commerce Clause protects against
inconsistent legislation arising from the projection of one
state regulatory regime into the jurisdiction of another
State.”).

     This case is little different from Sam Francis and NCAA,
for here there can be no doubt that the Department officials
sought to punish Daniels for disposing of medical waste in a
manner that was perfectly legal in the states in which Daniels
had effectuated disposal. The transactions in delivering and
paying for disposal took place within those states and, from
all that appears in the record, in accordance with their laws.
There is nothing to indicate that the transactions had any
effect whatsoever in California. See BMW of N. Am., Inc. v.
Gore, 517 U.S. 559, 572–73, 116 S. Ct. 1589, 1597, 134 L.
Ed. 2d 809 (1996). Rather, California has attempted to
regulate waste treatment everywhere in the country, just as it
tried to regulate art sales12 and Nevada tried to regulate rules



    12
         See Sam Francis, 784 F.3d at 1324.
14                 DANIELS SHARPSMART V. SMITH

violations procedures13 everywhere in the country. Of course,
that could also have the effect of requiring Daniels to run
afoul of other states’ regulation of medical waste disposal
within their jurisdictions, if California law directed something
different from their requirements. See NCAA, 10 F.3d at 639.

    Therefore, Daniels will likely succeed on its claim that the
Department officials’ application of the MWMA constitutes
a “per se violation of the Commerce Clause.” Id. at 640.
Were it otherwise, California could purport to regulate the use
or disposal of any item—product or refuse—everywhere in
the country if it had its origin in California.14 The district
court did not abuse its discretion when it determined that
Daniels was likely to succeed on the merits and enjoined the
Department officials from “enforcing the MWMA against
Daniels’s out-of-state waste disposal.”

     B. Qualified Immunity

    The Department officials sought dismissal of the action
on the basis of the defense of qualified immunity. While the
parties do not make any distinctions among the Department
officials, as the district court noted, Smith was sued in her
official capacity only and is therefore not entitled to qualified
immunity. See Eng v. Cooley, 552 F.3d 1062, 1064 n.1 (9th
Cir. 2009). Moreover, qualified immunity applies only to
liability for money damages—not injunctive or declaratory


     13
          See NCAA, 10 F.3d at 639.
     14
        We note that even if a law intended to protect the environment is
involved, the dormant Commerce Clause applies. See C & A Carbone,
Inc. v. Town of Clarkstown, 511 U.S. 383, 393, 114 S. Ct. 1677, 1683, 128
L. Ed. 2d 399 (1994).
              DANIELS SHARPSMART V. SMITH                   15

relief. See Hydrick v. Hunter, 669 F.3d 937, 939–40 (9th Cir.
2012).

    That said, the doctrine of “[q]ualified immunity ‘protects
government officials from liability for civil damages insofar
as their conduct does not violate clearly established statutory
or constitutional rights of which a reasonable person would
have known.’” Sjurset v. Button, 810 F.3d 609, 614 (9th Cir.
2015). “Qualified immunity gives government officials
breathing room to make reasonable but mistaken judgments
about open legal questions. When properly applied, it
protects ‘all but the plainly incompetent or those who
knowingly violate the law.’” Ashcroft v. al-Kidd, 563 U.S.
731, 743, 131 S. Ct. 2074, 2085, 179 L. Ed. 2d 1149 (2011).
In determining whether qualified immunity applies, courts
“must determine whether: (1) the facts adduced constitute the
violation of a constitutional right; and (2) the constitutional
right was clearly established at the time of the alleged
violation.” Mitchell v. Washington, 818 F.3d 436, 443 (9th
Cir. 2016).

    As we have already noted, it is likely that Daniels will
succeed on its claim that the Department officials’ application
of the MWMA violated the dormant Commerce Clause.
Thus, we will consider the question of whether Daniels’
constitutional rights under the clause were clearly established
for this purpose. We think not.

    In deciding if a constitutional right was clearly
established “at the relevant time, the key question is whether
the defendants should have known that their specific actions
were unconstitutional given the specific facts under review.”
Hamby v. Hammond, 821 F.3d 1085, 1090 (9th Cir. 2016).
In other words, the “‘right must be sufficiently clear that
16              DANIELS SHARPSMART V. SMITH

every reasonable official would have understood that what he
is doing violates that right.’” Id. (emphases in original).
However, the Court has insisted that the “‘clearly established
law’ should not be defined ‘at a high level of generality.’”
White v. Pauly, __ U.S. __, __, 137 S. Ct. 548, 552, 196 L.
Ed. 2d 463 (2017) (per curiam); see also Kisela v. Hughes, __
U.S. __, __, 138 S. Ct. 1148, 1152, __ L. Ed. 2d __ (2018)
(per curiam); Hamby, 821 F.3d at 1090. It is that rock upon
which the district court’s qualified immunity decision
founders.

    The district court was satisfied that, as it said, “[t]he
extraterritorialty doctrine has been clearly established for
decades.” No doubt that is so, but that is far from deciding
that it was clearly established that application of the MWMA
violated the doctrine. See White, __ U.S. at __, 137 S. Ct. at
552. Certainly, the Department officials could not look at a
decision dealing with the MWMA itself, and that statute at
least injected some ambiguity into the equation when it
declared that “[m]edical waste transported out of [California]
shall be consigned to a permitted medical waste treatment
facility in the receiving state.” Cal. Health & Safety Code
§ 118000(c). Of course, that does not say who must issue the
permit to the facility, and a reasonable official, who is not
knowledgeable about the arcane considerations lurking within
dormant Commerce Clause doctrine, could reasonably, if
erroneously, believe that the Department could control what
was done with California waste in another state.15 As we see


     15
       Perhaps the MWMA was intended to reach transactions outside of
California. But see Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 1207, 254
P.3d 237, 248, 127 Cal. Rptr. 3d 185, 198 (2011); N. Alaska Salmon Co.
v. Pillsbury, 174 Cal. 1, 4, 162 P. 93, 94 (1916). If so, that would not
change the result but would further support according qualified immunity
                DANIELS SHARPSMART V. SMITH                         17

it, this area is complex and murky enough that it was
improper to decide that Pilorin, Dabney, and Hilton could be
mulcted with damages for their error. The district court erred
in holding that they could be.

                          CONCLUSION

    We affirm the district court’s decision that Daniels is
likely to succeed on its claim that California cannot reach out
and impose its notions of the proper way to dispose of
medical waste upon those who are conducting disposal
activities in other states in accordance with the laws of those
states. Thus, the district court did not abuse its discretion
when it issued the preliminary injunction. However, we also
hold that the doctrine of qualified immunity does protect
Pilorin, Dabney, and Hilton from damages liability.

   AFFIRMED in part, REVERSED in part, and
REMANDED. The parties shall bear their own costs on
appeal.




to the Department officials. See Acosta v. City of Costa Mesa, 718 F.3d
800, 824 (9th Cir. 2013) (per curiam); Grossman v. City of Portland,
33 F.3d 1200, 1209 (9th Cir. 1994).
