Opinion ID: 2615125
Heading Depth: 2
Heading Rank: 1

Heading: undue burden on interstate commerce

Text: Brewers claim that the trial court erred in granting summary judgment against them because the application of the Act imposed an undue interference with interstate commerce in violation of Article 1, Section 8, Clause 3 of the United States Constitution. For example, Brewers assert that strong competition in various regions of the country will require them to cut prices to meet competition in those regions. To require them to cut prices across the country to meet regional competition would result in an unreasonable burden on interstate commerce. Brewers also claim that the Act, in effect, would require all brewers to adopt an FOB (free on board) pricing system and that they would not be allowed to charge a delivered price. The Act would increase prices to wholesalers, retailers and consumers in transshipped states since it forbids price reduction based on increased freight. It also would prohibit the discounting of distressed beer which must be sold before the shelf life affects its quality. Therefore, Brewers argue that the effect of the law is extra-territorial and burdens interstate commerce between the transshipping and the transshipped states, and that the trial court improperly granted summary judgment on the issue of whether the Act imposes an unreasonable burden on interstate commerce. We disagree. The Twenty-first Amendment to the United States Constitution grants each state broad regulatory power over liquor traffic within its borders. United States v. Frankfort Distilleries, Inc., 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951 (1945). Although the Twenty-first Amendment does not overrule the Constitution's Commerce Clause, each must be considered in the light of the other, and in the context of the issues and interests at stake in any concrete case.  Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 332, 84 S.Ct. 1293, 1298, 12 L.Ed.2d 350 (1964) (emphasis added). In granting summary judgment, the trial court followed the reasoning in the United States Supreme Court case of Joseph E. Seagram & Sons v. Hostetter, Chairman, New York State Liquor Authority, 384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336 (1966). [3] In Seagram, after reviewing constitutional arguments comparable to the constitutional challenges raised by Brewers, the Court rejected a facial attack upon Section 9 of New York's Alcoholic Beverage Control Law (New York's Section 9). A comparison of New York's Section 9 and the Act indicates an indistinguishable price affirmation setting. Both require wholesalers and retailers to file monthly price schedules with the respective state liquor authority accompanied by an affirmation that prices charged are no higher than the lowest price at which sales are made anywhere in the United States during the preceding month. In considering a Commerce Clause attack, the Court held that under the Twenty-first Amendment this particular method of regulation was valid on its face and not an unconstitutional burden on interstate commerce since the enforcement of the price affirmation law was stayed throughout the litigation. Specifically on the Commerce Clause argument, the Court reiterated its previous position that `a State is totally unconfined by traditional Commerce Clause limitation when it restricts the importation of intoxicants destined for use, distribution, or consumption within its borders.' Seagram, 384 U.S. at 42, 86 S.Ct. at 1259 (quoting Idlewild, 377 U.S. at 330, 84 S.Ct. at 1297 (1964)). The Court therefore determined that in relationship to the Commerce Clause, nothing in previous cases decided under Commerce Clause analysis would require a ruling that the New York's Section 9 was unconstitutional. In the more recent case of California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 110, 100 S.Ct. 937, 946, 63 L.Ed.2d 233 (1980) (citation omitted) (emphasis added), the Court relied on the Idlewild concept of a concrete case and stated: The Twenty-first Amendment grants the States virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system. Although States retain substantial discretion to establish other liquor regulations, those controls may be subject to the federal commerce power in appropriate situations. The competing state and federal interests can be reconciled only after careful scrutiny of those concerns in a `concrete case.' The present case is not a concrete case because the enforcement of the Act and House Bill 278 with respect to Brewers was enjoined throughout the litigation. Application of appropriate Commerce Clause analysis would be too speculative. While a statute that is constitutional on its face can be unconstitutional in its application, we find that in the present case the trial court properly granted summary judgment. Therefore, we agree with the trial court's reading of Seagram that on its face the Act does not impose an unreasonable burden on interstate commerce.