Source: https://www.law.cornell.edu/supremecourt/text/384/35
Timestamp: 2019-04-21 10:25:52+00:00

Document:
This appeal draws in question certain provisions of Chapter 531, 1964 Session Laws of New York, which worked substantial changes in the State's Alcoholic Beverage Control Law. The appellants are distillers, wholesalers, or importers of distilled spirits, who commenced this action in a New York court for an injunction and declaratory judgment against the appropriate state officials, upon the ground that § 9 of Chapter 531 violates the Federal Constitution in several respects. 1 The trial court upheld the constitutionality of the law, 2 and its judgment was affirmed by the Appellate Division 3 and by the New York Court of Appeals. 4 The appellants brought the case here, 5 and we now affirm the judgment of the Court of Appeals.
Chapter 531 was enacted as the result of a sweeping redirection of New York's policy regulating the sale of liquor in the State. For more than 20 years the Alcoholic Beverage Control Law (hereinafter ABC Law) had required brand owners of alcoholic beverages or their agents to file with the State Liquor Authority monthly schedules listing the bottle and case price to be charged to wholesalers and retailers within the State. These schedules were publicly displayed, and sales were prohibited except at the listed prices. 6 In 1950 the ABC Law was amended by the addition of a section which required brand owners or their agents to file price schedules listing the minimum retail price at which each brand could be sold to consumers and which prohibited retail sales at prices less than those fixed in the schedules. 7 The enforcement of these mandatory minimum retail prices was entrusted to the State Liquor Authority rather than to private action, but the Authority was given no power to determine the reasonableness of the prices that were fixed.
In 1963, against a background of irregularities within the State Liquor Authority and extensive dissatisfaction with the operation of the ABC Law, the Governor of New York appointed a Commission to study the sale and distribution of alcoholic beverages within the State. The Commission sponsored various study papers and issued a series of reports and recommendations. 8 It found unequivocally that compulsory resale price maintenance had had 'no significant effect upon the consumption of alcoholic beverages, upon temperance or upon the incidence of social problems related to alcohol.' It also found that New York liquor consumers had been the victims of serious discrimination because of the higher prices and reduced competition fostered by the mandatory minimum price maintenance provision of the law. 9 The Commission therefore recommended the repeal of that provision, 10 and the ultimate response of the legislature was the enactment of Chapter 531.
The legislature did not stop, however, with repeal of the mandatory resale price maintenance provision of the law. 11 In § 9 of Chapter 531 it imposed the additional requirement that the monthly price schedules for sales to wholesalers and retailers filed with the State Liquor Authority must be accompanied by an affirmation that 'the bottle and case price of liquor * * * is no higher than the lowest price' at which sales were made anywhere in the United States during the preceding month. It is this provision that is the principal object of the appellants' constitutional attack in this litigation.
The scheme of § 9 of Chapter 531 is rounded out by the addition to § 101b, subd. 3 of the ABC Law of paragraph (h), which prohibits sales to wholesalers and retailers of brands for which no affirmation has been filed; paragraph (i), which requires the 'lowest price' to reflect all discounts and other allowances to wholesalers and retailers, with the exception of state taxes and delivery costs; and paragraphs (j) and (k), which impose criminal penalties for the filing of a false affirmation.
Unlike Idlewild, the present case concerns liquor destined for use, distribution, or consumption in the State of New York. In that situation, the Twenty-first Amendment demands wide latitude for regulation by the State. We need not now decide whether the mode of liquor regulation chosen by a State in such circumstances could ever constitute so grave an interference with a company's operations elsewhere as to make the regulation invalid under the Commerce Clause. 13 See Baldwin v. G.A.F. Seelig, 294 U.S. 511, 55 S.Ct. 497, 79 L.Ed. 1032. No such situation is presented in this case. The mere fact that § 9 is geared to appellants' pricing policies in other States is not sufficient to invalidate the statute. As part of its regulatory scheme for the sale of liquor, New York may constitutionally insist that liquor prices to domestic wholesalers and retailers be as low as prices offered elsewhere in the country. The serious discriminatory effects of § 9 alleged by appellants on their business outside New York are largely matters of conjecture. It is by no means clear, for instance, that § 9 must inevitably produce higher prices in other States, as claimed by appellants, rather than the lower prices sought for New York. It will be time enough to assess the alleged extraterritorial effects of § 9 when a case arises that clearly presents them. 'The mere fact that state action may have repercussions beyond state lines is of no judicial significance so long as the action is not within that domain which the Constitution forbids.' Osborn v. Ozlin, 310 U.S. 53, 62, 60 S.Ct. 758, 761, 84 L.Ed. 1074. Cf. Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 63 S.Ct. 602, 87 L.Ed. 777; South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 189, 58 S.Ct. 510, 515, 82 L.Ed. 734; Baldwin v. G.A.F. Seelig, 294 U.S. 511, 528, 55 S.Ct. 497, 502, 79 L.Ed. 1032.
Moreover, as the Court of Appeals observed, the regulatory procedure followed by New York is comparable to that practiced by those States, 17 in number, in which liquor is sold by the State itself and not by private enterprise. Each of these monopoly States, we are told, requires distillers to warrant that the price charged the State is no higher than the price charged in other States. In at least one of these States, the distillers are required to adjust the sales price to include all rebates and other allowances made to purchasers elsewhere, and the State has taken positive precautions to insure that the contractual commitments are fulfilled. 14 In some respects the burden of gathering information for the warranties made to the monopoly States may be more onerous than that required for the affirmations under § 9, since the warranties generally cover prices in other States at the very time of sale to the monopoly State, whereas the affirmations filed under § 9 cover prices charged elsewhere during the preceding month.
The appellants' contention that § 9 violates the command of the Supremacy Clause needs no extended discussion. The argument is based upon a claimed inconsistency between § 9 and the federal antitrust laws, specifically the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. 17 (1964 ed.), and § 2 of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. 13 (1964 ed.).
In this as in other areas of coincident federal and state regulation, the 'teaching of this Court's decisions * * * enjoin(s) seeking out conflicts between state and federal regulation where none clearly exists.' Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440, 446, 80 S.Ct. 813, 817, 4 L.Ed.2d 852. We find no such clear conflict in the present case. The bare compilation, without more, of price information on sales to wholesalers and retailers to support the affirmations filed with the State Liquor Authority would not of itself violate the Sherman Act. Maple Flooring Mfrs. Assn. v. United States, 268 U.S. 563, 582586, 45 S.Ct. 578, 584586, 69 L.Ed. 1093; cf. American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S.Ct. 114, 66 L.Ed. 284. Section 9 imposes no irresistable economic pressure on the appellants to violate the Sherman Act in order to comply with the requirements of § 9. On the contrary, § 9 appears firmly anchored to the assumption that the Sherman Act will deter any attempts by the appellants to preserve their New York price level by conspiring to raise the prices at which liquor is sold elsewhere in the country. Nothing in the Twenty-first Amendment, of course, would prevent enforcement of the Sherman Act against such a conspiracy. United States v. Frankfort Distilleries, 324 U.S. 293, 299, 65 S.Ct. 661, 664, 89 L.Ed. 951.
Although it is possible to envision circumstances under which price discriminations proscribed by the Robinson-Patman Act might be compelled by § 9, the existence of such potential conflicts is entirely too speculative in the present posture of this case to support the conclusion that New York is foreclosed from regulating liquor prices in the manner it has chosen. 15 Moreover, § 7 of Chapter 531 has amended the ABC Law by granting to the State Liquor Authority ample discretion to modify the schedule requirements. 16 We cannot presume that the Authority will not exercise that discretion to alleviate any friction that might result should the ABC Law chafe against the Robinson-Patman Act or any other federal statute.
The first contention amounts to a claim of a deprivation of due process of law, based on the argument that s 9 is not designed to promote temperance and that it is an unwise, impractical, and oppressive law. But it is not 'the province of courts to draw on their own views as to the morality, legitimacy, and usefulness of a particular business in order to decide whether a statute bears too heavily upon that business and by so doing violates due process. Under the system of government created by our Constitution, it is up to legislatures, not courts, to decide on the wisdom and utility of legislation. There was a time when the Due Process Clause was used by this Court to strike down laws which were thought unreasonable, that is, unwise or incompatible with some particular economic or social philosophy. * * * The doctrine * * * that due process authorizes courts to hold laws unconstitutional when they believe the legislature has acted unwisely * * * has long since been discarded. We have returned to the original constitutional proposition that courts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws. * * *' Ferguson v. Skrupa, 372 U.S 726, 728730, 83 S.Ct. 1028, 10301031, 10 L.Ed.2d 93.
Moreover, nothing in the Twenty-first Amendment or any other part of the Constitution requires that state laws regulating the liquor business be motivated exclusively by a desire to promote temperance. 17 The announced purpose of the legislature was to eliminate 'discrimination against and disadvantage of consumers' in the State. 18 Frustrated by years of unhappyexperience with a state-enforced mandatory resale price maintenance system that placed exclusive price-fixing power in the hands of the distillers, the legislature adopted § 9 as the core of the liquor price reform contemplated by Chapter 531. We cannot say that the legislature acted unconstitutionally when it determined that only by imposing the relatively drastic 'no higher than the lowest price' requirement of § 9 could the grip of the liquor distillers on New York liquor prices be loosened. 19 In a variety of cases in areas no more sensitive than that of liquor control, this Court has upheld state maximum price legislation. See Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940; Townsend v. Yeomans, 301 U.S. 441, 57 S.Ct. 842, 81 L.Ed. 1210; O'Gorman & Young v. Hartford Fire Ins. Co., 282 U.S. 251, 51 S.Ct. 130, 75 L.Ed. 324; Gold v. DiCarlo, 380 U.S. 520, 85 S.Ct. 1332, 14 L.Ed.2d 266.
The statutory definition of 'related person,' which the appellants attack as unconstitutionally vague, includes any person 'the exclusive, principal or substantial business of which is the sale of a brand or brands of liquor purchased from such brand owner or wholesaler designated as agent * * *.' The claim of vagueness is centered upon the term 'principal or substantial.' We cannot agree that that language is so vague as to be constitutionally invalid. The Deputy Commissioner of the State Liquor Authority testified in these proceedings that where the determination of 'related persons' is unclear, the appellants will have access to the Authority for a ruling to clarify the issue. 20 As the Court said in Board of Governors of Federal Reserve System v. Agnew, 329 U.S. 441, 449, 67 S.Ct. 411, 415, 91 L.Ed. 408, '* * * we think it plain under our decisions that if substantiality is the statutory guide, the limits of administrative action are sufficiently definite or ascertainable so as to survive challenge on the grounds of unconstitutionality.' Cf. Opp Cotton Mills v. Administrator, 312 U.S. 126, 142146, 61 S.Ct. 524, 531533, 85 L.Ed. 624; Bowles v. Willingham, 321 U.S. 503, 512516, 64 S.Ct. 641, 646648, 88 L.Ed. 892.
Further, as the record indicates, the structure of the liquor industry is such that even the largest national distillers deal through a relatively limited number of wholesalers. 21 Frequently, a wholesaler agrees with a distiller not to sell brands of competing distillers in the same price range, and the prices charged by these wholesalers are potentially subject to the influence of the distillers. 22 We cannot say, therefore, that § 9 on its face imposes an unconstitutional burden on distillers or wholesalers in ascertaining the wholesalers who satisfy the 'related person' criterion or in obtaining information on prices charged by such wholesalers.
We do not find that these differentiations constitute invidious discrimination. The legislature could reasonably have believed that, once the prices on sales by distillers and 'related persons' were reduced, the prices of private label brands and brands sold by non-'related persons' would follow suit. Nor was it necessary for the legislature to impose the 'no higher than the lowest price' requirement on sales by retailers to consumers. The legislature might reasonably have concluded that consumer prices would adequately reflect the reductions in prices to wholesalers and retailers accomplished by § 9, even though the state fair trade statute, which permits private resale price maintenance agreements on sales to consumers, appears to have emerged unscathed by the enactment of Chapter 531. 23 'A statute is not invalid under the Constitution because it might have gone farther than it did, or because it may not succeed in bringing about the result that it tends to produce.' Roschen v. Ward, 279 U.S. 337, 339, 49 S.Ct. 336, 73 L.Ed. 722. '(T)he reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind.' Williamson v. Lee Optical of Okl., 348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563.
Although the appellants' primary attack is upon the constitutionality of § 9, they also challenge two minor provisions added by § 7 of Chapter 531 to the schedule requirements of the ABC Law. The first provision which requires the price schedules to cover sales to wholesalers 'irrespective of the place of sale or delivery,' is designed to bring wholesalers within the price-publicity requirement of the law, even though they take delivery of the liquor outside New York for distribution within the State. The second provision, which requires the price schedules on sales to both wholesalers and retailers to include 'the net bottle and case price paid by the seller,' tends to promote publicity of the seller's profit margins. 24 There is no indication in the present record that the State Liquor Authority will require the appellants to file schedules of prices on sales unrelated to the distribution of liquor in New York. As the Court of Appeals observed with regard to these provisions, 'The statute is concerned with New York practices and, if the sales in other States have no relevancy to New York enforcement, the statute permits the Liquor Authority for good cause to waive the general prohibition against sales to wholesalers in the absence of such schedules. It would be reasonable to expect that the statute would be administered consistently with its sole purpose to regulate the intrastate sale of liquor.' 16 N.Y.2d 47, 59, 262 N.Y.S.2d 75, 82, 209 N.E.2d 701, 706. We accept this construction of the statute by New York's highest court. N.A.A.C.P. v. Button, 371 U.S. 415, 432, 83 S.Ct. 328, 337, 9 L.Ed.2d 405. As so construed, these provisions serve a clear and legitimate interest of New York in the exercise of its constitutional power to regulate the sale of liquor within its borders.
Laws 1942, c. 899, § 1, Alcoholic Beverage Control Law, McKinney's Consol. Laws, c. 3B, §§ 101b, subd. 3(a)(d) (1946 ed.).
Laws 1950, c. 689, § 1, Alcoholic Beverage Control Law, § 101c (1964 Supp.).
See New York State Legislative Annual 401408, 484489, 498500 (1964); Breuer, Moreland Act Investigations in New York: 190765, pp. 131169 (1965). The Commission's Study Paper Number 5 ('Resale Price Maintenance in the Liquor Industry') and Report and Recommendations No. 3 ('Mandatory Resale Price Maintenance') are part of the record in this case.
Sellers seeking to take advantage of the milder affirmations required by paragraphs (e) and (g) must file a representation that they are not 'related persons.' See Alcoholic Beverage Control Law, Appendix, Rule 16 of the State Liquor Authority, § 65.7(e) (1965 Supp.), 9 NYCRR 65.7(e). The schedule requirements of § 101b do not apply to sales of private label brands of liquor. Alcoholic Beverage Control Law, § 101b, subd. 3(c).
Cf. State of Wisconsin v. Texaco, Inc., 14 Wis.2d 625, 630631, 111 N.W.2d 918, 921; Safeway Stores v. Oklahoma Retail Grocers Assn., 360 U.S. 334, 342, n. 7, 79 S.Ct. 1196, 1202, 3 L.Ed.2d 1280.
Section 101b, subd. 4 of the ABC Law authorizes the State Liquor Authority to promulgate rules to carry out the purpose of § 101b.
See Borregard & Glusker, The Distilled Spirits Industry: A Marketing Survey 65104, 133163 (Yale Law School 1950); Oxenfeldt, 'Whiskey Prices,' Industrial Pricing and Market Practices 445, 477, 483486 (1951).
The New York fair trade statute is the Feld-Crawford Act, Laws 1940, c. 195, § 3, as amended, General Business Law, McKinney's Consol.Laws, c. 20, §§ 369-a369-e. See National Distillers & Chemical Corp. v. Seyopp Corp., 17 N.Y.2d 12, 267 N.Y.S.2d 193, 214 N.E.2d 361; National Distillers & Chemical Corp. v. R. H. Macy & Co., 23 A.D.2d 51, 258 N.Y.S.2d 298; Fleischmann Distilling Corp. v. R. H. Macy & Co., 24 A.D.2d 977, 265 N.Y.S.2d 384; Victor Fischel & Co. v. R. H. Macy & Co., N.Y.Sup.Ct., 154 N.Y.L.J. No. 95, p. 17 (Nov. 17, 1965).

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