Earl Warren: Number 12, Original, State of California, Plaintiff, versus the State of Washington. Mr. Howland, had you completed your opening argument? If not, you may proceed.
Speaker: No, Your Honor, I have not. May it please the Court. Last evening at the recess, I have just completed my demonstration of the manner in which Washington, the State of Washington in a discriminatory manner that does everything possible to destroy the economic incentive of the 4800 retail licensees in that State who are authorized to sell at California as well as the wines of other origins. I turn now to the matter on which directly affects the interest of the State of California and the cause of action which the State of California has in its own right. And this has to do with the discriminations practiced by the State of Washington in connection with sales promotion work, having to do, of course, with the sale of wine. Now, if I may, I would like to define what I mean by sales promotion. I am not talking about advertising. By advertising, I mean the use of newspapers and other printed media, television, radio for advertising purposes. By sales promotion, I mean essentially, personal contact work with prospective buyers. I mean the dissemination of product information in such form that it can be used in retail stores. This product information is sometimes known in this trade as point of sale material, graphic sales aids, posters, displays, bottle holders, racks for the display of merchandise. It also -- wine being of the nature that it is, it also includes such things as wine selection charts, showing the proper use or the preferred use of various types of wine. And it also because wine is -- is used to a large extent in cooking, it also includes recipe books and that sort of thing. Now, so far as Washington wine is concerned, the State of Washington places no limitation on sales promotion activity on behalf of the sale of Washington wine. But with respect to California wine, again, Washington law is completely merciless in the flatness of its prohibition against sales promotion work on behalf of California wine. And again, because this discrimination is so apparent on the face of the statutes of the State and the regulations of the State Liquor Board, I should like to read a brief excerpt.
Felix Frankfurter: Is there any conflict between you and the Attorney General of Washington that Washington in fact purposed discrimination against California wine? Is that contested in this case? Or is the question merely whether Washington can promote its own wine industry?
Speaker: Well, the issue -- the -- our contention, sir, is that the State of Washington may not discriminate --
Felix Frankfurter: I understand that but --
Speaker: Yes.
Felix Frankfurter: -- is it -- have we started at the fact that Washington is seeking to exclude at least to the extent that it is California wines?
Speaker: Well, for purposes of this argument, the -- my friend, the Attorney General conceives that purposes of this argument, the allegations of the complaint must be taken to be true.
Felix Frankfurter: I just wondered therefore whether it's necessary --
Speaker: Yes.
Felix Frankfurter: -- to prove it.
Speaker: I don't think, Your Honor, that there is any substantial dispute concerning factual issues in this case.
Felix Frankfurter: But you can start off from there, couldn't you?
Speaker: Very nearly.
Hugo L. Black: Are you going to discuss the Twenty-first Amendment in connection with that?
Speaker: Very briefly, Your Honor.
Hugo L. Black: So what -- what constitutional provision do you rely on?
Speaker: We're -- we rely on the violation of Commerce Clause, the violation of the Privilege and Immunities Clause of Article IV, Section 2 and we say that there is no sanction for those violations to be found in the Twenty-first Amendment.
Hugo L. Black: No sanction?
Speaker: No, sir.
Hugo L. Black: Well, does the Twenty-first Amendment give Washington the right and power to dispose of liquors and wines that it sees fit? Is that the issue between you?
Speaker: No, sir. The -- the issue on that point is, as far as I'm concerned, the Twenty-first Amendment simply has no application to this case because we do not protest against any regulation or other Act of the State of Washington having to do with the transportation or the importation of liquor into the State of Washington. And this, of course, is the entire subject matter of the Twenty-first Amendment. The Twenty-first Amendment as Your Honor knows says that the transportation or importation of intoxicating liquor into a State in violation of its laws is prohibited.
Felix Frankfurter: Well, doesn't --
Speaker: (Inaudible)
Felix Frankfurter: -- California wine had to be transported into to get in to Washington?
Speaker: This is true. But the discriminations that we complain of, sir, occur only after California wine has been lawfully imported into Washington by the State Liquor Control Board.
Felix Frankfurter: Does Washington keep it out altogether? Keep -- keep out California wine and allow the vending, to sale, exclusively, of Washington wine?
Speaker: Well, sir that is not this case. If it were this case, I would take the position that that was not authorized by the Congress --
Felix Frankfurter: No?
Speaker: No, sir.
Hugo L. Black: Why isn't it very near this case if -- if Washington has -- was granted power by the Twenty-first Amendment to have a liquor business as it saw fit without regard of the liquor from any other place or any other town, how could it not be limited to its own people, production or limited to production -- any production (Inaudible) if they're given exclusive power by that Amendment to control the liquor ban without regard with the Commerce Clause and the other clauses?
Speaker: Well, I -- I'm not prepared to concede, Justice Black, that the Twenty-first Amendment does what you say.
Hugo L. Black: Well, I understand that.
Speaker: Yes.
Hugo L. Black: But it seems to me frankly from my view point, that's the issue. I -- I have some familiarity with that with that (Voice Overlap) --
Speaker: I'm quite sure, Your Honor, it does.
Hugo L. Black: From the -- the time it started -- before it started --
Speaker: Yes. But fundamentally, this will be one of the substantive issues on -- on the merits of this case.
Felix Frankfurter: That s why, Mr. (Inaudible) you said you're going to address yourself to it briefly. That implies that it's so obvious or so predominantly obvious that you don't have to pay much attention to it.
Speaker: Well, I think that the -- the -- we have referred to these matters in our -- in our opening brief. But, so far as the -- as the substantive law of the case is concerned, I think we have demonstrated that on the language of the Amendment, in the light of the Court's decisions to date, that we have here presented the Court with an open question for which there is no precedent to be found in the decisions of this Court. This is a question of -- of the utmost constitutional gravity. As I shall demonstrate in a moment, it is of the utmost consequence to the State of California and its economy. The matters cannot be summarily treated.
Hugo L. Black: But it's decisive, is it not, if it decided one more here, it disposes of any reason to go any further, was that not true?
Speaker: It -- in the broad sense of the word, that is correct. And when I say in the broad sense of the word, there are a number of related questions. It is not just one question. The --
Hugo L. Black: But the question, so far as I'm concerned at this time in that -- on that Amendment, the question whether the -- the Twenty-first Amendment was designedly intended. The -- it was -- whether it was intended to leave the States, free to handle liquor ban to keep the Federal Government out of it entirely on any -- any score on any basis.
Speaker: Well, I'm quite confident, sir, that that was not the intendment. The intendment of the Twenty-first Amendment as -- was nicely -- it was concisely put in the brief of the State of New York was to make dry States dryer not wet States wetter. The intendment of --
Hugo L. Black: Who said that?
Speaker: That's in the brief of the State of New York in describing the effect in the intendment of --
Hugo L. Black: Did I recall that New York within the State was the most insistent that before that Amendment was adopted through the effect that everything that -- that should be able to appeal, everything should be left to the State to decide the matters if so fit.
Speaker: Well --
Hugo L. Black: -- that State I think came to the main arguments in favor of that claim.
Speaker: In this case, may I say, the State of California makes no argument for any limitation on the power of any State to exclusively determine its own policy with respect to liquor, whether that be a policy of prohibition, of partial prohibition or of no prohibition. Whatever policy a State sees fit to make, we will defend the right of the States to adopt their policy free from interference from other States and free from interference from the Federal Government. The question about the Twenty-first Amendment very briefly is simply this, that for 60 years, this Court was confronted by a series of cases in which it appeared that the Commerce Clause, what this Court has called the immunity characteristic of the Commerce Clause was used to prevent dry States or States that were partially dry from preventing the influx of liquor from other States into their jurisdiction. It was consistently held right down to the -- the adoption of The Webb-Kenyon Act in 1913. Then, when the Twenty-first Amendment came along, the intendment of the Twenty-first Amendment, I don't think there's any question about this, the intendment of the Twenty-first Amendment was to assist dry States or States that had a policy of partial or total exclusion of liquor to aid them and to make that policy effective.
Hugo L. Black: (Inaudible) a little more than that. The intendment was to do away with prohibition as a national doctrine, and as a national law and to leave it up to the State to determine wholly for itself what would happen in its boundaries of reference to the sale of intoxicating liquors if anything.
Speaker: I would prefer to -- to state it this way Mr. Justice Black, the Twenty-first Amendment did not accept in its precise phraseology, in any way detract from the power of Congress to regulate interstate commerce. The Twenty-first Amendment had to the peculiar effect of make it -- making it impossible for Congress to repeal its Webb-Kenyon Act. The prohibition against Congress in 1913 had said that the transportation of liquor into a State in violation of the laws of that State shall be unlawful It said that in statute. The Twenty-first Amendment elevated that to a constitutional status.
Felix Frankfurter: But isn't that the essential nature of the -- isn't that the essence of the question namely, whether the Twenty-first Amendment limited itself to the old cases -- I'm doing the old cases In re Rahrer and so on or whether, and it's so often of a case, when Congress begins to deal with the subject either by statute or submission of an amendment, it goes beyond the cases of this Court which it seeks to affect. Isn't that the real question in this case?
Speaker: That could be a question.
Felix Frankfurter: Well, it -- not could be, isn't it? I'm not saying -- I'm not suggesting the (Inaudible)
Speaker: No. It is -- it is --
Felix Frankfurter: (Voice Overlap) --
Speaker: -- it is a question in the case, yes, sir.
Felix Frankfurter: And if the --
Speaker: (Inaudible)
Felix Frankfurter: -- and if the Amendment goes beyond those cases, then, it is enough to show that what Washington did was to go beyond those cases.
Speaker: No, but then we have -- we have -- but that would raise the further problem of how far beyond those cases and in what respect it goes beyond those cases. Take for example the -- it has been said that since the Twenty-first Amendment, the Equal Protection Clause no longer applies to liquor legislation. Well, this is obviously not the law.
Hugo L. Black: Why?
Speaker: Because this Court in Goesaert against Cleary debated and decided a question in which the sole issue was equal protection of the laws or the -- of the fourth -- the application of the Fourteenth Amendment to certain liquor regulations of the State of Michigan. So that if your statute has to do that with the internal liquor administration of the State's laws, there is equal protection.
William O. Douglas: But if Washington wanted to --
Speaker: That's --
William O. Douglas: -- if Washington provided that California wine could be admitted only for say, religious purposes or medicinal purposes, would you have any question here?
Speaker: Not if that were on a non-discriminatory basis, no, sir. We honor the policies of the dry States. There are two bone-dry States still in this country.
Felix Frankfurter: Is Washington treating California differently than it's treating Ohio and New York?
Speaker: No, sir. But it's treating --
Felix Frankfurter: So that the discrimination -- I'm not using that legal term but the differentiation that Washington makes is between wine from Washington and wine coming from any other 47 States?
Speaker: That is precisely correct.
Felix Frankfurter: So, the question whether she can make that discrimination is the heart of this case, isn't it?
Speaker: Yes, sir.
Felix Frankfurter: I'm not -- I'm not pleading myself --
Speaker: No, sir.
Felix Frankfurter: -- of course, if my previous opinion in the (Inaudible) I've had my difficulty.
Speaker: That -- that --
Felix Frankfurter: (Voice Overlap) I should like to join Justice Black has indicating that at least for one more member of this Court, that seems to me the crucial question --
Speaker: That is the --
Felix Frankfurter: -- what you hurdle, the question of standards.
Speaker: That is correct.
Felix Frankfurter: (Inaudible) the -- the threshold query so that's -- that's not a constitutional question.
Speaker: No --
Felix Frankfurter: Now, I'm -- I'm surprised -- or rather I was surprised that we've talked about it (Inaudible) that you're remarking -- address yourself to the Twenty-first Amendment briefly.
Speaker: Yes, sir.
Felix Frankfurter: And that implied to me that you thought that was an easy aspect of this case.
Speaker: No.
Felix Frankfurter: To me, it's the most difficult.
Speaker: No, it is – it is the most difficult and it will require the most extended treatment.
Felix Frankfurter: All right. Would you prefer to leave it on the brief? (Inaudible)
Speaker: I prefer to -- to leave it on the brief.
Felix Frankfurter: (Inaudible)
Speaker: It has no application to this case. The decisions of this Court to date of the four cases, Young's Market, the Triner case, the retaliation cases, all have to do with state laws that directly regulated or prohibited the importation of liquor. Now, in this case, we don't even refer in our complaint.
Felix Frankfurter: What you're saying --
Speaker: -- through the Washington statute, that makes the Washington State Liquor Board the only lawful transporter or importer of liquor into that State.
Felix Frankfurter: I am saying that the Twenty-first Amendment isn't so all-inclusive that no other provisions of Constitution, such as when treating New York and California different, in showing the preference from New York and against California is within the scope of the Twenty-first Amendment, that is your position?
Speaker: That is my position. Yes, sir. The Washington wineries, if I may return to the matter of the sales promotion program, the Washington wineries not only promote the sale of their own respective brands of Washington wine, they also do institutional promotion. And by institutional promotions, I mean, promoting the sale of Washington wine generically, without respect to any particular brand or trade name. And the promotion work that is in fact done in the State of Washington, is done at the wholesale level through the 135 private wholesalers of Washington wine. This actually is the only efficient way to conduct this type on operation. There are only a 135 wholesalers as against 4800 retailers. And the key to this type of promotional work, of course, is the manpower of the wholesaler's organizations, the personal and frequent contacts which the salesmen have are with the retailers. And it's the economic existence of these Washington retailers that makes possible the kind of sales promotion that Washington does. Now, that is precisely the kind of an activity that the State of California through its own official agencies has been carrying on for 20 years. To date, the State has spent about $25,000,000 in this activity and its current activity is at the rate of about $2,700,000 a year. California maintains representatives all over the United States, 19 of them outside the State of California. We have an office in New York City, one in Chicago and in this promotion work, the State devices promotional programs to use a commercial term. These are -- these are very frequently seasonal in their nature. The State has a contract with -- with the advertising agency. And these graphic sales aids, posters, colored photographs, store displays and so forth are all designed for a particular promotion. When one of these comes on, the state representatives contact every wholesaler in their area. They instruct the wholesaler's salesmen in the use of this particular promotional material and the wholesaler's salesmen then in the -- their routine contact with the retailers take this material around, distribute it, set it up in the stores and so on. This is exactly what Washington wineries do in the State of Washington. This is exactly what the State of California does all over the United States except in Washington. And the reason we cannot do it in Washington is, of course, the practical effect of these Washington statutes which I have referred to yesterday. It is this projection of the official functions of California beyond its borders. This actual interstate activity or interstate intercourse in which California is engaged, is what gives California undeniable standing to sue in this case. In the brief of the State of Washington, the point is made that while this activity is conducted actually by an agency of the State of California, that actually a -- the Washington position is that it is on behalf of -- of the -- the California wine industry. And I should like to address myself to this point for a moment because that is not true. The California sales promotion program is exclusively in aid of the State's own statewide policy.
Felix Frankfurter: Why do you as a practical fact, why do you take that position. Why is it -- do you not say, I'm asking. But, of course, it affects the wine industry and the money that's made by private people who own it but the relation to the wine industry to the economy of the whole State as such, that it has deeper significance.
Speaker: That's just about what I was to say, Your Honor.
Felix Frankfurter: And then you say if you can't take (Inaudible)
Speaker: Well, I -- I was about to differentiate the difference between the State's own interest and the obvious benefits from the state program, which in your -- to the wine industry. No one, it would be silly to deny that the wine industry benefits from this activity of the State. But the State's motivation is not simply to help a few private businessmen. The State's motivation principally, is to protect its own unique agricultural structure. Agriculture is not only the biggest business in California. It is peculiarly dependent upon free access to the markets of the country. I think that there is no State in the United States that is so peculiarly dependent for -- for at least in the food stuffs in the kind of agricultural products that is directly consumed by humans. There is no State comparable to California in its dependence upon free markets. California produces a third of all the commercial fruits, a quarter of all the commercial vegetables. It's quite true that in recent months, we in California, as well as our friends in Texas have had to take the back seat, statistically, so far as the size of a State is concerned. Alaska has got us both (Inaudible) But so far as the question of the disposal of our agricultural surpluses are concerned, California yields to no State, when we have 90% of all the peaches that are produced in this country, 90% of all the carloads of lettuce that are shipped commercially.
Potter Stewart: California has been (Inaudible)
Speaker: We have under our marketing act a program for peaches. There have -- have been at times programs concerning lettuce. And I -- I cannot answer your question as to whether there is a lettuce program in effect at the moment. But under this statute --
Potter Stewart: (Inaudible)
Speaker: That's on the wine promotion program.
Potter Stewart: And does that money -- what's the source of that? General taxes or some --
Speaker: That -- that is -- that is raised by a special excise tax on wine which is readied for market, under the --
Potter Stewart: So the industry itself makes the money, is the source of money.
Speaker: The industry itself is the source of the money. But this is true in a great deal of -- of state government activities in California.
Felix Frankfurter: Roads --
Speaker: Sir?
Felix Frankfurter: Do roads -- the upkeep of roads derive largely from --
Speaker: For highway taxes.
Felix Frankfurter: For highway taxes.
Earl Warren: Mr. Howland, is the -- does the magnitude of this business greatly affect your argument here or would -- or would the same thing apply to -- to anyone of the 207 commercial, agricultural products that -- that California has? Could they -- would California have a program of this kind in -- in everyone of those 212 commercial products and thus -- thus make itself a plaintiff in an original action in this Court to -- against discrimination as you have done here?
Speaker: I think that in view of the -- the decisions of the -- the prior decisions of the Court, that say that in parens patriae action that the injury must be of great magnitude. There may be some question arise to some of the lesser industries where if -- that whether or not that would be true. In this case, it is not a question because of all the products that California raises, grapes are the largest and most valuable single crop produced for human consumption.
Earl Warren: Yes, but there are only about -- there are only three other States that -- that really produce any -- any wine, Washington, Michigan, Ohio, and New York, four, I would say. Well now, let me ask you this. How -- what would this mean monetarily to the State -- to the vendors of California if they sold all of the -- the wine in Washington that -- that they are not now selling?
Speaker: In a -- in a --
Earl Warren: If they have the monopoly of all the wine -- wine in Washington, how much would it mean in dollars?
Speaker: In a free economy, that -- that's impossible to predict.
Earl Warren: Well, how much -- how -- what percentage of the wine -- wines that are sold in Washington are California wines?
Speaker: Roughly, 45%.
Earl Warren: 45%? And roughly, what is the total value of -- of the wine sold in Washington?
Speaker: The California wine sold in Washington at the present time is worth about $2,500,000 at the winery level.
Earl Warren: At the winery level. Well, then -- then this would probably amount to about $3,000,000
Speaker: Or it would go --
Earl Warren: Would go 55%.
Speaker: Statistically, we have shown in our complaints, sir, that the traffic in wine in the State of Washington has actually been curtailed as a result of these discriminations. Based upon the -- the experience in the other monopoly States where there is no discrimination, the amount will be considerably more than -- than the figures you mentioned would indicate.
Earl Warren: And all -- all States don't consume the same amount of wine per capita, do they?
Speaker: Sir?
Earl Warren: All States did not use the same --
Speaker: No.
Earl Warren: -- amount of wine per capita.
Speaker: No.
Earl Warren: That's --
Speaker: No.
Earl Warren: -- pretty hard to --
Speaker: There's -- there's a --
Earl Warren: -- determine (Inaudible)
Speaker: -- a wide -- wide variation there. But I would like to close with -- with a -- a reference to a point that was brought up yesterday. And that was a question of whether or not, a hypothetical question, of whether or not if a suit were brought by a different plaintiff, on a different cause of action, from a practical point of view, there would be some relief to the State of California. This is a legal possibility. Anything is possible. The practical point of view, it is most unlikely, and I should like to briefly say why. In all of the Court's prior decisions dealing with its original jurisdiction, the question has not been, “Can this plaintiff get relief at the instance of suit by another plaintiff?” The question before that this Court has previously considered was whether or not there was an alternative for a different trial court for this particular plaintiff to take his cause of action to. There are a great many situations in the law where an injury, a fact, results in common injury to many and simply because one injured party doesn't or hasn't sued, has never been considered to be a reason why an -- the -- another injured party could not sue on his own cause of action.
Felix Frankfurter: But couldn't you -- couldn't California start the litigation even in the state court of Washington or in the District Court of the United States, District Court in California?
Speaker: No, sir. We are barred by an Act of Congress.
Felix Frankfurter: Which says what?
Speaker: From bringing this cause in the District Court. This is Section 1251 (a) (1) of Title 28, which states that in controversies between two or more States --
Felix Frankfurter: It must come here.
Speaker: -- the -- the original jurisdiction of this Court is exclusive.
William J. Brennan, Jr.: I suppose though California could have curiae amicus in any action brought by California business that are not against Washington.
Speaker: There is a serious question, Justice Brennan, in my mind --
William J. Brennan, Jr.: Well, it's been --
Speaker: -- as to --
William J. Brennan, Jr.: - done recently, has it?
Speaker: There's no private litigation in this field pending.
William J. Brennan, Jr.: What? And I don't mean in this field. What -- what --
Speaker: In any Court.
William J. Brennan, Jr.: The one in Texas, the District Court allowed that one of the States, one of the federal states, was it?
Speaker: I'm not familiar --
William J. Brennan, Jr.: (Inaudible)
Speaker: I'm not familiar with that.
Felix Frankfurter: But could you --
Speaker: The point -- the point I -- I should like to make is that there -- there -- that a California wine producer seeking to bring that action against the State of Washington has really got problems. If he is a California wine producer, whose wine is now being sold in Washington, having disposed of his complete right, title and interest when he sells that wine to the Washington State Liquor Board, does he have any standing to sue as to what the State Liquor Board does with that wine after he has voluntarily committed it to them? If the California winery was one of the many who does not have any of its wine sold in the State of Washington, then on what can it complain? In what respect has it been injured? I simply suggest that there are greater problems here in formulating a suit by a private litigant.
Felix Frankfurter: Couldn't you -- couldn't California sue the Washington State of officials on the basis of Ex parte Young? If your claim is right, then -- then the - the (Inaudible) of Washington are null and void and as for the officials of Washington are acting out -- they are acting illegally.
Speaker: This is the --
Felix Frankfurter: So these are the questions of this Mr. Howland. But, of course, either -- either in a controversy between the State and the State, this Court (Inaudible) evidence is required. All your argument is based on the assumption, I think, (Inaudible) judicial notice of economics, facts and the consequences of those facts.
Speaker: I don't -- I don't think that there is any disputed question of fact in this case. I think that this case if it couldn't be submitted on the pleadings that we would be able to stipulate with our friends from Washington upon facts. And I should like to call the Court's attention to the opinion of the Court in the Pennsylvania Railroad case, Georgia against Pennsylvania Railroad, where in the dissenting opinion it was pointed out that the reason why this Court is concerned about its original jurisdiction, and the reason why a Court looks at the possibility of an alternative forum is because of the relatively heavy demands upon the time of this Court in cases where it must evaluate the evidence even if it's been referred out to (Inaudible) And I simply suggest that in this case where there is no substantial issue of fact that that reason or -- or that line of reason has no application.
Earl Warren: Mr. Howland, one -- one thing that bothers me is this that as you know, there are a tremendous number of trade barriers throughout the country.
Speaker: Yes, sir.
Earl Warren: And I suppose there are very few States that are not affected adversely by one or another or maybe many of those trade barriers or so. Now, does your argument lead us to the conclusion that if any trade barrier raised by a State adversely affects any segment of the economy of another, does that gives the State the right to bring an original action against the other in this Court?
Speaker: Not in all circumstances.
Earl Warren: Now, would you differentiate and -- and just try to tell me where the -- where the line is drawn because that -- that does bother me.
Speaker: In -- well, in this – in this case, it can be drawn on the basis of the -- this extraordinary thing in the American economy of a State through its own official agencies going out and itself engaging in interstate commerce with its activities being intermeshed and intertwined with those of private industry. So that in this case, we actually have the State's own cause of action. Now, this does not occur very often.
Earl Warren: But, it could occur in -- in any -- any State or in any -- any product, could it not?
Speaker: Certainly. And this -- this Court has more than once rejected the -- the task of trying to definitively define its original jurisdiction. There could be other cases. But I say that -- that this is not opening up Pandora's box because this is the first time in the history of this Court that the case with the State's own cause of action built into it, that we have here, has never been submitted. The -- that is where this case differs from the parens patriae cases. This is a parens patriae case but we also have the State of California being denied its own constitutional rights because of the effect of the Washington statutes, the Washington discriminatory system upon the State's trade promotion program. And this -- this is a fact in this case. It's a situation of that -- well, I can say that it's never been presented to the Court before.
Earl Warren: Well, we have or did -- or did have in California a number of marketing orders --
Speaker: Yes, sir.
Earl Warren: -- that were somewhat in the same relationship as this. Is it your belief that in any of those instances, California, because it had evolved these marketing orders, would have the right to represent that segment of the industry and original action?
Speaker: Many -- many, in fact, most of our marketing orders have nothing to do with sales promotion programs.
Earl Warren: Yes, but that's an incident that it could -- it could very, very easily, couldn't it?
Speaker: The -- the State does not have the extraterritorial activity. The State does not inject itself into interstate commerce in the types of marketing order that are concerned with other things than trade promotion.
Earl Warren: I know. But wouldn't it -- wouldn't it be a very easy step to -- to put a clause of that kind in each marketing order where -- wherein would it be different with any -- any industry, take the -- take the peach industry or any other industry. Why couldn't we do the same thing there as we do here?
Speaker: The -- as far as the law is concerned, the State of California could promote the sale of California peaches --
Earl Warren: Then I --
Speaker: (Voice Overlap) statute but we don't.
Earl Warren: Then the mere -- do you rest your case then on the fact that the State has adopted this program? Is that -- if -- if you didn't have this program, would the State be in here as if in the position of --
Speaker: If we didn't have the program, we would then be here in the same situation of the State of Georgia was in the Pennsylvania Railroad case.
Earl Warren: Yes, properly here you say?
Speaker: There's got to be a straight -- a straight parens patriae type of situation.
Earl Warren: And you think properly here because of the importance of the --
Speaker: And I think you would properly be here because of the importance of this industry to the economy of the State, yes, sir.
Earl Warren: Yes. I see.
Speaker: But -- but we have a stronger case for this --
Earl Warren: Yes.
Speaker: -- because --
Hugo L. Black: Is there any similarity between your raisin program and the Washington wine program?
Speaker: The -- the -- there is a raisin -- you mean the State's --
Hugo L. Black: The one we had up some years ago.
Speaker: You mean the prorate case?
Hugo L. Black: Yes.
Speaker: There is direct similarity in the operation of -- within California. In -- in that case, this Court decided that that raisin prorate program was an official function of the State of California. And under this Act, our state procedures are so similar that what the Court said in that case -- that was in Parker against Brown I believe. What the Court said in that case is fully applicable here. This is the -- the program of the State of California; it is not a program of California --
Felix Frankfurter: Except -- you would say except (Inaudible) because -- unless I'm wrong, the wine industry is more important than the raisin industry. Is it in California?
Speaker: They are both -- they are both from grapes.
Felix Frankfurter: Yes, I understand.
Speaker: What we're talking about is our tremendous vineyard industry where we produce five times the number of grapes of all the rest of the United States put together. And where wine is a more important outlet for grapes than raisins is. But raisin is --
Felix Frankfurter: The relation to economy is different.
Speaker: That is correct.
William J. Brennan, Jr.: Mr. Howland, is the Sunkist program a privately-financed or is that state-financed? And (Inaudible) Sunkist program out of California for years?
Speaker: Yes.
William J. Brennan, Jr.: On oranges?
Speaker: Yes.
William J. Brennan, Jr.: Is that privately or was that state-financed promotion program?
Speaker: There are elements of both, Justice Brennan and I -- I cannot accurately answer your question. I'm just not familiar with it.
Earl Warren: Attorney General O'Donnell or O'Connell, I beg your pardon, sir.
John J. O'Connell: Chief Justice, may it please the Court, distinguished counsel. To answer first an inquiry by Justice Brennan in regards to the Attorney General as amicus, in our brief, we cite verbatim -- report verbatim a case called (Inaudible) versus --
William J. Brennan, Jr.: (Inaudible) potatoes, it was milk, though, wasn't it?
John J. O'Connell: It was milk. And it's cited in our brief where the Attorney General appeared as amicus. If I might just capsulize the facts of each, California produces more than --
William J. Brennan, Jr.: Will it --
John J. O'Connell: -- 85% --
William J. Brennan, Jr.: -- will it bother you if I ask you first to say whether you deny that Washington has a program designed further, the sale of Washington wine, and that in carrying out that program, one of the means is to curtail the use of California wine? Is there a dispute of fact on that issue?
John J. O'Connell: I do not recall, Your Honor, exactly what the precise allegations of the plaintiff's complaint are in that regard. I do not know whether he specifically alleges that Washington is in a conspiracy --
Hugo L. Black: I'm not talking about it.
John J. O'Connell: Well, whether Washington specifically does that or not, I don't know whether he still alleges but of course, if he does, we would have to admit it for the purpose of this argument. But, were we allowed or would this matter proceed further, we would make certain affirmative allegations in that and attempt to show otherwise. Does Your Honor understand me?
Hugo L. Black: Well, I -- I just thought you'd know whether that was -- what your program did so if we could -- if that's the case, it gets down probably to a question of whether the Twenty-first Amendment controlled it which might have to be decided or might probably be decided at this time. If -- if Washington is doing it and says it's doing it.
John J. O'Connell: I practically couldn't say, Your Honor. I imagine that one could get varying opinions from the effect of Washington's statutes. I know privately, I thought, that Washington discriminated against its own wine and found out later that it was alleged in many sources that Washington in fact discriminated it against California wine. And that's because, if I should go to a state liquor store, I couldn't buy Washington wine but I could buy California.
Felix Frankfurter: The answer to Justice Black's question may be important at least to some of us because if you can't state that, that is a question of fact whether there is discrimination, and we may not have to reach the constitutional question whether discrimination is permitted under -- under the Twenty-first Amendment.
John J. O'Connell: Well, for that purpose, Your Honor, perhaps we would say, for the purpose of this argument, we admit as true California's allegations and we will assume they go that far.
Felix Frankfurter: But I, for one, don't want the consent of admission which may be contrary to fact on the basis of which a constitutional opinion should be elicited.
John J. O'Connell: I'm not sure whether the precise allegations to California contain that fact or not. But I assume the entire purport and intent of California's allegations are in that direction.
Hugo L. Black: Or that one of the consequences might result from not knowing whether that is a bonafide issue of opinions, that is, if the Court might do (Inaudible) that -- but should not the right kind of case to decide here.
John J. O'Connell: Well, California does allege that Washington treats California wine differently than it does Washington wine or domestic wine and that the effects of these treatment is to damage the State in its governmental interests and it's private citizens in their economic interests. What California does definitely make that allegation that the effects of Washington's statute are discriminatory to California's interest.
William J. Brennan, Jr.: Well, Mr O'Connell, I noticed at page 5, subdivision (c) of paragraph (2) of the complaint, the purpose and effect of this discriminatory scheme of regulation is unreasonably distress competition.
John J. O'Connell: Then if that is in the complaint, Your Honor, we admit it to be true for this purpose that the purpose was discrimination. Then it is admitted for the purpose of this argument.
Tom C. Clark: I thought your defense was one, no standing and two, the (Inaudible)
John J. O'Connell: That is precisely our defense, Your Honor.
Tom C. Clark: So you admit the facts are true?
John J. O'Connell: We have to.
Felix Frankfurter: Yes, but counsel, not even the Attorney General of two States can agree on -- on a hypothetical case in order to elicit from this Court a constitutional adjudication. As Justice Black has indicated, we have refused --
John J. O'Connell: We did not bring this complaint.
Felix Frankfurter: I know you didn't.
John J. O'Connell: -- Your Honor. And --
Felix Frankfurter: I'm not --
John J. O'Connell: -- we are required to take this position.
Felix Frankfurter: I'm not suggesting any -- any action or pleading on your part not within your appropriate powers. I'm merely suggesting the difficulty of a ourt bounded in -- this Court is in dealing with hypothetical cases.
John J. O'Connell: Well --
Felix Frankfurter: And you don't care on what ground this (Inaudible)
John J. O'Connell: No, we don't, Your Honor.
Felix Frankfurter: [Laughs]
Tom C. Clark: And your position is you don't have to plead from the case to get through this.
John J. O'Connell: Exactly, Your Honor.
Tom C. Clark: (Inaudible)
Felix Frankfurter: But if questions from the bench elicit that it's a hypothetical case, then the Court regards that in arguments and that, I take it, is the inference drawn from your answer to Justice Black's question. You're in a comfortable position if I may say so. [Laughter]
John J. O'Connell: Yes, Your Honor, but I would like to be perfectly fair in this regard too and not take undue advantage to California because it is substantially alleged partly that this is the effect of Washington's regulations.
Hugo L. Black: And you do argue the substantive questions in the third subdivision of your brief with reference to the Twenty-first Amendment.
John J. O'Connell: We do, we do. And as the Court can clearly see, there are not -- there are two issues in this case and I would hesitate to say which of the two is the most important or the more important and with the indulgence of the Court in this brief time, I will address myself to the first, that of original jurisdiction and my associate Mr. Garrington will address himself fully to the second, that of the Twenty-first Amendment and other constitutional involvements.
John M. Harlan: Could I ask you one question?
John J. O'Connell: Yes.
John M. Harlan: Do you agree -- do you treat New York the same way you treat California?
John J. O'Connell: Exactly. Our statutory distinction is between domestic --
John M. Harlan: And --
John J. O'Connell: -- and non-domestic.
John M. Harlan: All -- all wine-growing States are treated the same way.
John J. O'Connell: That's correct.
John M. Harlan: Wine-producing States.
John J. O'Connell: It has been pointed out, California has 85% of the national market including wines from other countries. There are four States that engage in some wine-producing activity, New York, Ohio, Michigan, Washington, roughly in that order. California sells 45% of the wine consumed in the State of Washington. The domestic winery sell 50%, other wine in the States and foreign wine from out of the United States comprise 5%. The total consumption is slightly in excess of 2,000,000 million gallons per year.
Earl Warren: Do you know what the dollar volume is Mr. Attorney General?
John J. O'Connell: I do not, Your Honor. I have it some place but it isn't immediately available. Washington by statute and regulations confined, first of all, it's a monopoly State. All liquor is involved with the State of Washington. Hard liquor, if I might use that expression, distilled spirits have to be sold through a state monopoly store. Beer can be sold anywhere without regard to the state monopoly store. The statutes make a distinction on domestic and non-domestic wine.Domestic wine can be sold directly through a wholesaler to a retail. Non-domestic wine has to be sold through the State Monopoly Board. The only purchaser directly of non-domestic wine in the State of Washington is the State Liquor Control Board. In this instance, it buys California wine in California F.O.B. It ships it to its warehouse within the State of Washington. It disperses without further costs to its various retail store outlets around the State from which it is purchased by the eventual consumer. The argument of California in regard to original jurisdiction is basically threefold. Number one, they say that the pure governmental interest of the State of California is restrictive. Number two, they say they have the responsibility by the declarations of their legislature to commence and initiate actions of this kind. Number three, they say because of the possible damage to their private citizens by the activities of the State of Washington, they have the duty to bring suit in a quasi-sovereign capacity. California urges that this case in regard to original jurisdiction is unique. It's unique in its factual pattern as perhaps all cases are. But it is certainly not unique to this Court in its question of original jurisdiction. In answer to California's argument, number one, that they had a pure governmental interest involved in this case, it is our position that the agency of the State of California created through its agricultural code and a marketing order which sort of puts the State, if you please, in the wine business. We contend that our statutes and our regulations have nothing to do with the official arm of the State of California. All of our regulations are directed to manufacturers, seller, wholesalers. They can't do this or that in regard to non-domestic wine. California by its very constitution prohibits the State of California from being a manufacturer or a seller of wine. How in the world then, if California contends that this arm of the State of California is the State of California in its sovereign capacity, how in the world then does the State of Washington restrict the activities of the State of California? Of course, we do not. Nor is this quibbling on our part. We do believe if the State is suing in a purely proprietary or government capacity it must stand and fall as an individual, integral party plaintiff in that regard. However, California alleges that because of the effect of our regulations on its private businessmen, they are somewhat affected because their whole program is disturbed by our specific regulations or statutes that refer to their private citizens. We have cited to Your Honors to many cases in this regard specifically if California has any interest because of that indirect connection at all. We have cited the Georgia versus Tennessee Copper case, where the State of Georgia claimed it had some interest because its rules were being eroded by the action of the noxious gases of the Tennessee Company. This Court calls such interest to make way similarly, in Georgia versus Pennsylvania. The interest of the State as the owner of a railroad or of many -- the owner of many institutions needing railroad services this Court also called such an alleged direct interest make way. We have referred Your Honors to the case in this regard of Oklahoma versus Cook which we think somewhat directly parallels this instant case. In the case of Oklahoma versus Cook, by the Oklahoma statutes, the State itself brought an action following the insolvency of a bank against the shareholders of the bank for the benefit of creditors. California, in its briefs states this, the wine sales promotion activities of the State are those of a commercial or industrial organization promoting nationwide sales of its products. In the Oklahoma case, the Court said the protection of depositors of insolvent state banks as a distinct economic policy of the State Oklahoma. And our court said this, “We must look beyond the mere legal title of the complaining State to the cause of action asserted into the nature of the State's interest further. But this principle does not go so far as to permit resort to our original jurisdiction in the name of the State, but in reality, for the benefit of particular individuals.” Albeit, the State assert economic interest in the claims and declare their enforcement to be a matter of state policy. California's second argument can be quickly disposed of, in our opinion. The legislative declarations of the legislature of California have urged the proper officials of California and the Attorney General of California to bring actions to a limit -- to eliminate trade barriers with -- with specific reference to the wine industry, now under consideration. Of course, this argument has been early answered and often answered by this Court. An individual state legislature cannot give it state power of its state powers that would cause it to have an original jurisdiction of the United States Supreme Court. This Court is the decider of that issue. The early case was that of New Hampshire versus Louisiana, a case again similar was the case just cited the case of Oklahoma versus Cook. California must have this power or this right of original jurisdiction directly in her own right and not because of anything, her legislature however, impelling that might be to the people of California. The third argument of California is that it has original jurisdiction because of the economic interest of its citizens. We have done a little mathematics in our brief in regard to the amount or the quantum of this interest affected. And we assume but that by some wizardry, the State of California would gather in the entire Washington State wine market. And we compared the amount that would be in comparison to the general farming economy of the State of California and the economic impact assuming this unlikely fact of total appropriation of the Washington wine industry or the Washington wine market is 18 thousands of 1%. That is the impact on the farm economy of the State of California.
Felix Frankfurter: How many States doing that which Washington is argumentatively doing?
John J. O'Connell: I have not made a thorough study, Your Honor of other States. But I think that Michigan does somewhat, similar activity to the State of Washington, but exactly what other States do this, in what regard, I am not prepared to answer.
Felix Frankfurter: Can you state that Mr. Attorney, what percentage of California wine goes outside of California, roughly?
John J. O'Connell: I don't --
Felix Frankfurter: (Inaudible)
John J. O'Connell: Oh, by all means. If California sold 85% of the National Wine Market, it can be readily seen how much wine goes out of California. Although, as Mr. Chief Justice pointed out, the consumption ratio of States is different. California's rate of consumption, for example, is twice that of the State of Washington.
Felix Frankfurter: So the problem before us may be beyond Washington in isolation vis-à-vis California.
John J. O'Connell: Oh, yes.
Speaker: (Inaudible)
John J. O'Connell: In relation to the same question, the economic interest of the State of California, suing a quasi-sovereign capacity as parens patriae, there are many cases as the Court well knows. These cases generally have three requirements Number one; the injury or threatened injury must be to all the, or a substantial portion of the State's citizens. Number two the threat must be to the health, safety and general welfare of those citizens. Number three; the invasion must be of serious magnitude. The Court well knows that most of these cases divide themselves into three groups boundary, disputes, water diversion cases and cases of pollution or public nuisance. In all of these of cases, the Court explored the facts thoroughly in order to find a genuine sovereign interest, a fact that would seem to be lacking in this case. The two cases --
Hugo L. Black: Why do you say that?
John J. O'Connell: The genuine sovereign interest --
Hugo L. Black: Well it --
John J. O'Connell: -- because --
Hugo L. Black: -- if you take the words, you use there as the standard, which one of three would you say is not met by --
John J. O'Connell: Two.
Hugo L. Black: -- the allegations (Inaudible)
John J. O'Connell: The injury is not to all or a substantial portion --
Hugo L. Black: Not to a substantial portion?
John J. O'Connell: That's right. I do not think so, Your Honor --
Hugo L. Black: Why?
John J. O'Connell: -- although, that again could be a matter of opinion.
Hugo L. Black: Well, what would you think substantial (Inaudible) if that's the standard or the keyword?
John J. O'Connell: Well, I think the substantial portion means a great deal more than the wineries in the State of California.
Hugo L. Black: But they say the grapes people -- all the people that raise grapes which is the biggest farm crop they have.
John J. O'Connell: That's true, but it isn't as big as it would appear.
Hugo L. Black: As what?
John J. O'Connell: It isn't as big as it would appear. I think, if I'm not mistaken, it represents 4% of agriculture economy of the State of California.
Hugo L. Black: Would you think the automobile industry, for instance, would be -- affect the substantial number of people in Michigan?
John J. O'Connell: It might under some circumstances. If I might point this out a little further, Your Honor, and take the two cases that are a little bit different than the standard, quasi-sovereign cases, that's Pennsylvania versus West Virginia and Georgia versus Pennsylvania. In Pennsylvania versus West Virginia, West Virginia restricted the interstate transportation of its natural gas, to Pennsylvania and Ohio, States that had been using that natural gas in their industry and then their homes for many, many years. And this is what this Court said about the magnitude or the impact of that invasion. The private consumers in each State not only include most of the inhabitants of many urban communities but constitute a substantial portion of the State's population. Their health, comfort and welfare are seriously jeopardized by the threatened withdrawal of the gas from the interstate stream. This is a matter of grave public concern in which the State as the representative of the public has an interest apart from that of the individuals affected. And in Georgia versus Pennsylvania Railroad, this is what the Court said in regard to the magnitude of the matter involved.Georgia as a representative of the public is complaining of her role which they have proven limits the opportunities of her people, shackles her industries, retards her development and relegates her to an inferior economic position among her sister States. These are matters of grave public concern in which Georgia has an interest apart from that of the particular individuals who may be affected. And indeed, in these two somewhat extensions of the basic quasi-sovereign cases, the Court can readily see how strong the impact of the invasion laws on those two cases. In the instant case if I submit, this invasion -- this impact, this magnitude does not exist. We say that the real parties and interest in this case is not the State of California. The real party and interest is the private wine industry of California and I submit, perhaps only the larger or the most important, of these particular wine. Finally --
Hugo L. Black: Do you think they would have standing in the New York or State Court?
John J. O'Connell: I do indeed, sir. And in that regard, we argue that this Court is not the proper forum to decide the matters in this case. In Louisiana versus Texas, this Court said jurisdictions, they gave original jurisdiction is a so delicate and grave in character that it was not contemplated that it would be exercised, save when the necessity was absolute. The original jurisdiction of this Court is sparingly, carefully and gravely given. I am not one to speak with authority on the dockets of this Court but may I say this, commodity commissions of the type involved here are a growing thing. The number runs in my mind in the State of California in the amount of 47. I don't claim that to be wholly accurate but I know that there are dozens of these commissions engaged in the trade promotion, advertising and research activities of the various products they are designed to promote. These products are principally in interstate commerce particularly with respect to California. These products in the main, will go outside the State of California. I can speak for our State which is new in this commodity commission way of doing business. We already, although we started much later than in California, have seven of these commissions. I could imagine if jurisdiction were granted in this instance that any group of citizens engaged in the business of any kind can find a denying State to act in a so -- somewhat governmental capacity towards them. And finding, thereby, some discrimination in some State of the Union to which they export, come to this Court and on the basis of finding an original jurisdiction, herein, ask the Court for an original jurisdiction.
Felix Frankfurter: But it does make a difference in life than an industry plays a major part in the well being and the economic well being of a State as against some industry (Inaudible) part and if it plays that important part in life, why shouldn't in law?
John J. O'Connell: Again, Your Honor, the matter is just one of magnitude.
Felix Frankfurter: That's what these questions usually are questions (Inaudible)
John J. O'Connell: And if the Court desires to open up these gates to this type of activity toward a course as its own desire in that regard.
Felix Frankfurter: If --if you open a gate, you don't have to let everybody in.
John J. O'Connell: Although -- yes, Your Honor.
Charles E. Whittaker: (Inaudible)
John J. O'Connell: I beg your pardon?
Charles E. Whittaker: If this is the way (Inaudible)
John J. O'Connell: If it isn't, it should be. And certainly, we would have a right to rely on the consistency in that regard and I could think in our own State of two or three suits that we would be interested in exploring possibilities of instituting in regard to our commodity commissions.
Felix Frankfurter: What West Virginia against Pennsylvania, the other way around (Inaudible) the question of quantity if it (Inaudible)
John J. O'Connell: That's correct, that's correct.
Felix Frankfurter: And that the quantity is a -- is a function of this exercise of jurisdiction.
John J. O'Connell: It certainly is, Your Honor. I agree with that wholeheartedly and in the West Virginia case, the impact was of a substantial nature involving a great many of the citizens of both States. Although counsel for California has indicated that there might not be a factual dispute in this regard, I think Your Honors can clearly see that there very possibly would be such a factual dispute.
Hugo L. Black: Why?
John J. O'Connell: The question of temperance in the State of California or in the State of Washington --
Hugo L. Black: Question of what?
John J. O'Connell: Temperance, the promotion of temperance by these regulations.
Felix Frankfurter: Do you mean that California wine is (Inaudible)
John J. O'Connell: That is a matter of opinion, if Your Honor, please. But I don't think it's without the realm of possibility that should these restrictions be dissolved, the State of Washington would be deluge by highly competitive cheap wine that would certainly increase the per capita consumption of our citizens. That is a --
William J. Brennan, Jr.: Are there restrictions in the hard liquor field?
John J. O'Connell: There are none. Do you mean there are no discriminatory restrictions in that sense? But, of course, our law was always monopoly for distilled spirits or hard liquor and we have no comparable area with which to compare the consumption in that regard.
William J. Brennan, Jr.: You would hardly describe this program and Washington as being a temperance program.
John J. O'Connell: But, I think if Your Honor will find many of these cases in the Twenty-first Amendment field, that is one of the matters in which the Court has seen fit to be interested. We'll be interested in the quality of the non-domestic wine, the reasonableness of our regulations, matters of that kind. The -- this case can be totally disposed as it was mentioned somewhat yesterday where the fact that there was another form available, had any effect upon this Court granting jurisdiction originally. Every allegation in California's complaint and every remedy which California seeks can be obtained at one suit. This isn't the case like Georgia versus Tennessee proper where there were a numerous -- or there were numerous citizens that would have to bring a multiplicity of suits. One suit could answer this. We submit that that suit can be brought either in the courts of the State of Washington or in the federal courts within its boundaries and every issue therein can be decided. Washington is not going to run away. It is servable and it is suable in either of the courts that I refer to. And every matter raised in this complaint of California can be resolved (Voice Overlap) --
Hugo L. Black: Does the Washington Constitution permit suits to be brought against the State?
John J. O'Connell: Yes, it does, Your Honor.
Hugo L. Black: You do not even have to go through the suit of the (Inaudible) officially --
John J. O'Connell: (Voice Overlap)
Hugo L. Black: -- be direct.
John J. O'Connell: We submit, you can do that also.
Hugo L. Black: We can do either?
John J. O'Connell: Yes. Thank you, Your Honors.
Earl Warren: Mr. Garlington.
Speaker: Mr. Chief Justice and may it please the Court. I shall address myself to the question of whether or not California has stated the cause of action. This assumes that somehow, the Court has determined there is original jurisdiction, so far as their capacity is concerned. It is our position she has not stated the cause of action. Now, of course, the complaint of the State of California is that the particular statutes and regulations, restricting her wine in our State, violate two constitutional provisions, the Privileges and Immunities Clause of Article IV, Section 2 and the Commerce Clause. If I may first briefly address myself to the first of these points the Privileges and Immunities Clause. So as far as we can see, this clause is -- or provision is simply not available to the State of California. As Your Honors know, the Eleventh Amendment prohibits all suits against the State by or for citizens of other States, New Hampshire versus Louisiana. Therefore, California has been put in a position of bringing this action in a quasi-sovereign capacity. Now, this is important and material to the question of privileges and immunities because we have to examine the capacity in which California brings this suit to see if it's a person or a citizen within the protection of the Privileges and Immunities Clause. What is the capacity, that of California? She has likened her capacity to that of Georgia. In Georgia versus Tennessee Copper Company where -- Mr. Justice Holmes described it, in that capacity the State has an interest independent of and behind the title of its citizens in all the air, earth and within its domain. And again and again, the Court has defined this quasi-sovereign interest as being an interest apart from that of the individual's concern. So clearly, California, as a sovereign State, is bringing this as a State, not as a group of citizens. Now, accordingly, the Privileges and Immunities Clause is not applicable to this suit. It is a protection afforded only natural persons. I think an interesting case in this regard is Bank of Augusta versus Earle. There, the Bank of Georgia Corporation was seeking to sustain its right to exercise corporate powers in another State, namely Alabama. And that right to exercise these corporate powers outside its own State was challenged. It invoked the Privileges and Immunities Clause. And it was there held -- well first, the argument on behalf of the bank was that if all it's members of the corporation were rather than of Georgia and they were within the protection of the Privileges and Immunities Clause then the corporation should be, too. That was rejected and it was held there that the corporation, not being a natural person was not within the protection of the clause. And excellent discussion of the nature of the clause is contained against Paul versus Virginia, decided in 1868 where the Court said, “The term citizens as used applies only to natural persons, members of the body politic owing allegiance to the State, not to artificial persons created by the legislature possessing only the attribute -- attributes which the legislature has prescribed.” In Blake against McClung, a case involving an insolvency statute where residents of the State were preferred over non-residents. The Court held that it -- there was a violation of the Privileges and Immunities Clause with respect to natural persons residing out of Tennessee but the foreign corporation could not avail itself of that provision. Accordingly, it would seem that through this clear line of authority, California, not being a natural person, may not invoke the Privileges and Immunities Clause. And on authority of Hill versus District of Columbia which we have cited in our brief, we would suggest that she cannot invoke it, invoke this provision since she is not within the class of persons with respect to whom the alleged acts of Washington are unconstitutional. Now, I will discuss the Twenty-first Amendment. I wish only to add before leaving the Privileges and Immunities Clause that what I shall say of the Twenty-first Amendment with respect to the Commerce Clause, applies equally to the Privileges and Immunities Clause namely the Twenty-first Amendment has taken the restrictive and regulatory acts of a State with respect to imported liquor outside these provisions of the Constitution. Now, with respect to the Commerce Clause, it is said that not only is our legislation and regulations a burden but it is discriminatory with respect to California wine which squarely presents the question of the effect of the Twenty-first Amendment. In it's brief, and as I understand it today, California has contended that the true meaning of the Twenty-first Amendment is still in doubt. Suggested that what courts -- what this Court has said in the past with respect to the Twenty-first Amendment is mostly dicta. It implied that this Court has never adequately considered the Twenty-first Amendment or it's economic significance. Well, this is certainly not so. The Amendment has been carefully and fully considered by this Court. The arguments of California in this case, as many of Your Honors know, are mere repetitions of ones that have been made many times before. In the course of its brief, California has contended, as I understand its contentions, that the Twenty-first Amendment should apply only to imports into dry States. That the Amendment prohibits imports of liquor into a State only when, in violation of proper or reasonable state laws, rather than state laws, as the Amendment reads. That finally, that somehow the Webb-Kenyon Act was overlooked by this Court when it first construed the Twenty-first Amendment. Now, I find the complete answer to all of these contentions in the State Border of Equalization of California versus Young's Market Company. Therein, Justice Brandeis did a remarkable thing in that he set up each of these contentions in concise language and answered each in concise, clear, understandable language. I can't improve on his language and if the Court will indulge me, I should like to refer to some of it because it is so completely applicable to this case. There, the Court held -- what the plaintiff's complaint of is the refusal to let them import beer. Now, of course, this case involved a license fee for the privilege of importing beer into the State of California. It squarely presented the meaning of the Twenty-first Amendment to the Court. The Court held, what the plaintiff's complaint of is the refusal to let them import beer without paying for the privilege of importation. Prior to the Twenty-first Amendment, it would obviously been unconstitutional to impose a fee for that privilege. The position would have been -- would have been void, not because it resulted in discrimination but -- but because that he was a direct burden on commerce. The Amendment which prohibited the transportation or importation of intoxicating liquors into any State in violation of the laws ,thereof, abrogated the right to import free, so far as concerns intoxicating liquor. Now, Justice Brandeis gave the basic construction to the Amendment. He said, “The words used are apt to confer upon the State the power to forbid all importations which do not comply with the conditions which it prescribes.” I think the word, “conditions” are important. Then, he analyzed the contentions of the plaintiff. He said the plaintiffs asked us to limit this broad command. They request us to construe the Amendment, they're saying in effect, the State may prohibit the importation of liquors, providing it prohibits the manufacture and stay within its borders. That's one of the contentions that I understand, of California. It only applies to the dry States. But if it permits such manufacture and sale, then it must compete on equal terms with the domestic intoxicants. To say this would involve not a construction of the Amendment but a rewriting of it. Then he answers the question that the -- the contention that the state regulation must be reasonable. Plaintiff argued that, despite the Amendment, the State may not regulate importations except for the purpose of protecting the public health, safety or morals. The importer's license fee was not imposed to that end. Same contention that California has made here. Surely, the State may adopt the lesser degree of regulations said Justice Brandeis, than total prohibition. Can it be doubted that a State might establish a state monopoly of the manufacture and sale of beer and either prohibit all competing importations or discourage importation by levying a heavy impost or channelize desired importations by confining them to a single consignee. And in that last language, of course, he identified the practices of the State of Washington in confining our imports to the single consignee, of namely, the State Liquor Board. Then with respect to the charge that the Court had overlooked the Webb-Kenyon Act, Justice Brandeis said, “As we think the language of the Amendment is clear, we do not discuss these matters.” Referring to the prior interpretations given the Webb-Kenyon Act which being an Act of Congress, was not subject to the same rules of construction as the constitutional amendment. He said, the claim that the statutory provisions and the regulations are void under the Equal Protection Clause may be briefly disposed of, classification recognized by the Twenty-first Amendment cannot be deemed forbidden by the Fourteenth. Well, since this case, Young's Market case, involved and required the construction of the meaning of the Twenty-first Amendment, it did not constitute dicta, merely because the principles announced in construing this Amendment governed other fact patterns certainly does not mean that it was dicta. These determinations were given in response to contentions made in the case and were necessary to the case. And the principles laid down there by Justice Brandeis are the law and not dicta. Now, California in the face of Young's Market case says our case is different in that it involved discrimination whereas Young's Market case did not. But California has, in this respect, overlooked Indianapolis Brewing Company versus the Liquor Control Commission. That case involved a Michigan Act which prohibited local dealers from selling beer manufactured in another State that discriminated against Michigan. This was clearly a discrimination type law and the very worst type with respect to the Commerce Clause. It was a clear burden and a discrimination on interstate commerce. It was contended that it did violate the Commerce Clause, the Due Process Clause, and the Equal Protection Clause of the Fourteenth Amendment. The Court held for whatever its character, the law is valid. Since the Twenty-first Amendment was held in the Young's Market Company case, the right of a State to prohibit or regulate the importation of intoxicating liquor is not limited by the Commerce Clause. Another clear case of discrimination was that involved in Joseph S. Finch and Co. versus McKittrick, also decided in 1939 by District Justice Brandeis, involving the Michigan's and Missouri's statute, which is similar to the other -- at which I described prohibited imports from States that discriminated against Missouri. Again, it was attacked on the basis of violating the Commerce Clause and the several clauses of the Fourteenth Amendment. The Court said, “The claim for the unconstitutionality has rested in this Court, substantially on the contention that the statute violates the Commerce Clause.” It's urged that the Missouri law does not relate to the protection of health, safety, and morality or the promotion of their social welfare, but it is merely an economic weapon of retaliation. And hence, the Twenty-first Amendment should not be interpreted as granting power to enact it.” Since that Amendment, the right of a State to prohibit or regulate the importation of intoxicating liquor is not limited by the Commerce Clause, and it was citing Young's Market case.
Potter Stewart: (Inaudible) the other one. It involved the impact of the Twenty-first Amendment upon the Commerce Clause on certain parts of the Fourteenth Amendment. None of them were involved in the impact of the Twenty-first Amendment (Inaudible)
Speaker: That is correct, Your Honor. I think this is a noble contention raised for the first time in this case by the State of California. Of course, as Your Honor will readily apprehend, the language and the scope of the language as it has referred to the Commerce Clause and to the Equal Protection Clause of the Fourteenth Amendment, can -- is indistinguishable from its operations upon the Privileges and Immunities Clause, and that is our second contention with respect to that clause which you cannot distinguish the protection of that Privileges and Immunities Clause over the Protection of the Equal Protection Clause of the Fourteenth Amendment for these purposes. And the case in point, which particularly discussed the matter of the Equal Protection Clause is Mahoney versus Joseph Triner Corporation decided in 1938, again, by Justice Brandeis. In that case, the State of Minnesota passed a clearly discriminatory law which prevented the -- the sale of liquor in Minnesota if it contained more than 25% alcohol, unless it would register with the Patent Office. The particular economic purpose of the status at the time, but it obviously had no relationship to any police power purpose. It was challenged under the Fourteenth Amendment and with particular emphasis on the Equal Protection Clause. The Court held the statute clearly discriminates in favor of liquor process within the State as against liquor process (Inaudible) But only the locally processed may be sold regardless of whether the brand has been registered, that under the Amendment, discrimination against imported liquor is permissible, although it is not an incident of reasonable regulation of the liquor traffic, was settled by State Board of Equalization versus Young's Market case. Now, California has made another contention in its reply brief which I feel must answered. And that is that, and again, in the argument today, that the Twenty-first Amendment applies only to incidents of regulations at the border apparently, at the importation. So -- as soon as that liquor is within the State, the Twenty-first Amendment is no longer applicable. Well, first of all, let us understand the operation of the Washington statutes as set out. It does prohibit the importation of wine into the State of Washington, except that purchased by the Liquor Board. The wine purchased by the State Liquor Control Board is purchased pursuant to statutes, which governs its sale and distribution and so forth inside the State of Washington. And that is the condition upon which any California wine comes into the State. And it is a condition which is rightfully imposed by the State of Washington under the Twenty-first Amendment. Now, this Court, I am sure, has never understood the operation of the Twenty-first Amendment to apply only to the act of importation, but ceasing to have effect after the liquor became -- came inside the territory of the State. The understanding of Mr. Justice Black is set out in United States versus Frankfort Distilleries, decided in 1945. This case, you may recall, involved the application of the Sherman Act against price conspiracy by liquor companies. It was contended by the defendants that since the Sherman Act derived its power from the Commerce Clause, the Commerce Clause no longer operated with respect to liquor that they had a defense. And, of course, the Court decided that that was true only if the States had indicated they approved of the price regulation. But for our purposes here, as to whether or not the Twenty-first Amendment applies to the control of liquor within a State, Mr. Justice Black said, it is argued, the Twenty-first Amendment to the Constitution bars its prosecution. That Amendment bestowed upon the States broad regulatory power over the liquor traffic within their territories. It has not given the States plenary and exclusive power to regulate the conduct of persons doing an interstate liquor business outside their boundaries. Granting the States -- this is the important language, granting the State's full authority to determine the conditions upon which liquor can come into its territory and what will be done with it after it gets there, it does not follow from this the fact that the United States is without power to regulate the conduct of those engaged in interstate trade outside the jurisdiction of the State of Colorado. And, Mr. Justice Frankfurter, in his concurring opinion, indicated his understanding in this respect, if a State, for its own sufficient reasons, deems that the desirable policy to standardize the price of liquor within its borders, either by direct price fixing statute or by permissive sanction, the Twenty-first Amendment gives it the power and the Commerce Clause as not being said. The understanding being that this applied equally to regulation within the State after the liquor had arrived as well as the act of importation. And I think the case of Ziffrin versus Reeves, decided in 1939, wherein the Court speaking through Mr. Justice McReynolds held that the Twenty-first Amendment actually freed the States of restrictions on the export of liquor as well as the import, again, an activity that was commencing within the State. There is no basis, of course, for the proposition that it must -- that the Twenty-first Amendment applies only to the act of passing the liquor across the border. It does apply, of course, with respect to regulations within the border. Now, the interpretation placed upon the Twenty-first Amendment by this Court has been criticized by some as being unrealistic, permitting trade discrimination and yet, it's been praised by many, too. And certainly, there are very sound policy reasons as well as simply interpreting the Amendment as it was written or interpreting it as it has been. Those are contained in Carter versus Virginia and had been written in the concurring opinion of Justice Frankfurter. I see it had (Inaudible)
Felix Frankfurter: Is there anything -- Mr. Attorney, is there anything in the available legislative history meaning by that the (Inaudible) statements by those who spoke to the -- submitted the Amendment either in the Senate or House or where there reports which give any light on this?
Speaker: Yes, Your Honor.
Felix Frankfurter: What are they?
Speaker: I -- I might comment on those. We have conflicting quotations in the plaintiff and the defendant's briefs. One statement by Senator Blaine indicated that --
Earl Warren: Where are you reading from, Mr. --
Speaker: I have -- insofar as the plaintiff's brief is concerned, I believe it's page 47, the yellow one. Yes, page 48. Senator Blaine was quoted as saying --
Felix Frankfurter: Was he in charge of the proposed amendment?
Speaker: I believe he was the Chairman of the Judiciary Committee, my recollection is, Your Honor. His language was -- I thought his language is quoted in the plaintiff's brief. In any case, there is some --
Hugo L. Black: It is quoted --
Speaker: -- language which has (Voice Overlap) --
Hugo L. Black: It is quoted at the bottom of page 47, top of page 48 (Inaudible)
Speaker: Oh, yes. They said to ensure this so called dry States against the importation of intoxicating liquors into those States, the language which has been quoted in the law review articles. Then he also said, which we have quoted on page --
Felix Frankfurter: If that's true -- if that is true, certainly, isn't it?
Speaker: Well, that is true. That -- that's sort of an a fortiori situation. That is included within the greater --
Felix Frankfurter: What do you rely on? What does Washington rely on? What (Voice Overlap) --
Speaker: Well --
Felix Frankfurter: (Voice Overlap) by --
Speaker: -- our --
Felix Frankfurter: -- the responsible spokesman --
Speaker: Well --
Felix Frankfurter: -- for submission of the Amendment does Washington rely on, a shedding light? Any?
Speaker: None.
Felix Frankfurter: All right.
Speaker: Flatly, none. We -- we thought we would counter their language, perhaps that was superfluous. But of course, the language of a senator with respect to a constitutional amendment has no bearing, whatsoever, upon its construction.
John M. Harlan: (Inaudible)
Speaker: Yes, Your Honor. I -- Justice Frankfurter more or less disposed of the point with his question. Well, certainly the interpretation, by this Court, of the Twenty First Amendment is reasonable. And it stemmed from a history of very great difficulty in trying to adjust the extensive and admitted police powers of a State in regulating liquor with the Commerce Clause and the Equal Protection Clause. And so this language is asked by Mr. Justice Frankfurter in Carter versus Virginia. It is now suggested that a State must keep within the limits of reasonable necessity and this Court must judge whether or not Virginia has adopted regulations reasonably necessary to enforce its local liquor laws. Such canons of adjudication open wide the door of conflict and confusion, which have in the past characterized the liquor controversies in this Court and in no small measure form part of the unedifying history which led first to the Eighteenth and then to the Twenty-first Amendment. Less than six years ago, this Court rejected the impossible task of deciding instead of leaving it for legislatures to decide what constitutes a reasonable regulation of the liquor traffic. The issue was fairly presented in Mahoney-Triner Corporation, and that was the holding. Therefore, the State of Washington first, because California has not demonstrated a capacity to maintain this action, secondly, because she has not stated the cause of action in view of the Twenty-first Amendment. I respectfully ask this Court that her -- her petition to file her original complaint be denied.