This article provides a discussion of whether Prop 2 in California requires that hens live in a cage-free environment. It is unclear why, if cage-free was the intention of Prop 2, why it wasn't written in the proposition.
Colony cages
An interesting modification of the cage system has been developed in Vietnam. These are large colony cages on stilts/legs and made from bamboo with external feeders and drinkers. They hold about 12 or more layers. The eggs roll out of the cages as in battery cages as the floor is on a slope of about 1 cm in 8 cm. The manure can be collected underneath the raised split-bamboo floor. The large cages are in a barn or house. Such a system may be successful in other countries and is a good compromise between the barn and the battery cage system.\
Another source described the system in more detail. This source described a colony cage system as providing only 67 square inches per bird, the same as a battery cage. The difference is that the colony cage holds 26 birds, provides dustbathes and nest boxes, and perches. The "space per bird" does not include the dustbathe and nest box, I hope. Using this description, a colony cage is life a furnished cage, but worse in that the hens have less space per bird. Not surprising, the colony cage is good in some ways, bad in others (e.g. cannibalism).
If the description above adequately describes these "colony cages", I can understand why HSUS is upset. One could easily believe that the hens in colony cages fare only little better than those in battery cages, and due to the larger flock size, maybe worse.
The reason Petaluma Farms is pursuing colony cages is simple: costs.
But Riebli, a partner in Petaluma’s Sunrise Farms, producer of a million eggs a day, estimated that a hybrid colony system would boost his expenses by only 5 to 12 cents a dozen, an amount he maintains he could reasonably expect to recoup from consumers. But he estimated that conversion to a cage-free operation would increase his expenses by 40 to 50 cents a dozen.
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