Opinion ID: 3046278
Heading Depth: 3
Heading Rank: 1

Heading: H.P. Hood & Sons, Inc. (1949)

Text: H.P. Hood & Sons, a Massachusetts corporation selling milk in Boston, purchased raw milk from New York milk producers and maintained three receiving depots in New York, which it operated pursuant to a New York state license.27 H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 526, 69 S. Ct. 657, 659 (1949). Hood sought a license from the New York Commissioner of Agriculture and Markets (the “Commissioner”) to operate a fourth receiving depot. Under the New York law, no such license could be granted for an existing business to operate an additional facility “unless the commissioner is satisfied that . . . the issuance of the license will not tend to a destructive competition in a market already served, and 27 The Supreme Court’s decision in H.P. Hood does not indicate whether H.P. Hood held a license for each of its receiving depots or whether it held a single license for all three. 28 Case: 11-10475 Date Filed: 12/28/2012 Page: 29 of 81 that the issuance of the license is in the public interest.” Id. at 527 n.3, 69 S. Ct. at 659 n.3 (quoting N.Y. Agric. Mkts. Law § 258-c) (emphasis added). The Commissioner denied Hood’s license application, finding a new plant would “tend to a destructive competition in a market already adequately served.”28 Id. at 529, 69 S. Ct. at 660. Hood sued, and the Supreme Court held that the New York statute, as applied, violated the dormant Commerce Clause by discriminating against interstate commerce. The Supreme Court explained that the Commissioner’s reason for denying Hood a permit was that its new facility would allow Hood to take business from, and cause shortages in, local New York markets. Id. at 540, 69 S. Ct. at 666. This objective was impermissible because the Commissioner denied Hood’s license request “upon the sole and specific grounds that it will subject 28 Specifically, the New York Commissioner explained: If [Hood] is permitted to equip and operate another milk plant in this territory, and to take on producers now delivering to plants other than those which [Hood] operates, it will tend to reduce the volume of milk received at the plants which lose those producers, and will tend to increase the cost of handling milk in those plants. If [Hood] takes producers not delivering milk to local markets such as Troy, it will have a tendency to deprive such markets of a supply needed during the short season. There is no evidence that any producer is without a market for his milk. There is no evidence that any producers not now delivering milk to [Hood] would receive any higher price, were they to deliver their milk to [Hood’s] proposed plant. Id. at 528–29, 69 S. Ct. at 660. 29 Case: 11-10475 Date Filed: 12/28/2012 Page: 30 of 81 others to competition and take supplies needed locally, an end, as we have shown, always held to be precluded by the Commerce Clause.”29 Id. at 542, 69 S. Ct. at 667. The Supreme Court rejected the Commissioner’s claim that the statute did not discriminate against interstate commerce because Hood already held a license to operate three other New York facilities from which Hood could ship an unlimited amount of milk to Massachusetts. Id. at 539, 69 S. Ct. at 665–66. The Supreme Court observed that milk receiving depots must be located close to milk producers, and therefore Hood could not increase its milk distribution by expanding its existing New York facilities. Id. at 540, 69 S. Ct. at 666. The Supreme Court stressed that, even though Hood itself was already participating in the New York milk distribution market, the Commissioner’s rationale for restricting Hood’s operation of a new facility, if permitted, would also allow the state to exclude new entrants in the milk distribution market. Id.