Document: 476 U.S. 573 106 S.Ct. 2080 90 L.Ed.2d 552 BROWN-FORMAN DISTILLERS CORPORATION, Appellantv.NEW YORK STATE LIQUOR AUTHORITY. No. 84-2030. Argued March 3, 1986. Decided June Syllabus New York's Alcoholic Beverage Control Law (ABC Law) provides that a distiller, licensed to do business in the State, may not sell its products wholesalers within State except accordance with monthly price schedule previously filed appellee Liquor Authority, and requires distiller include an affirmation prices are no higher than lowest will charge anywhere else United States during month. Appellee determined ABC prohibited appellant which sells liquor York other States, from offering certain promotional allowances (based on past purchases projections of future purchases) payment lowered "effective price" appellant's those wholesalers, thus violating provision Law. After license revocation proceedings were instituted against appellant, it sought review appellee's ruling Appellate Division Supreme Court, held, inter alia, did face directly regulate interstate commerce violation Commerce Clause Federal Constitution. The Court Appeals affirmed. Held: 1. Law, face, violates Clause. Pp. 578-585. (a) In analyzing state economic regulation under Clause, critical consideration is overall effect law both local activity. 578-579. (b) While as here, seek lower for consumers, insist producers or consumers surrender whatever competitive advantages they possess. Baldwin v. G.A.F. Seelig, Inc., 294 511, 55 497, 79 L.Ed. 1032. Economic protectionism limited attempts convey merchants; give advantage over States. mere fact effects triggered only by sales therefore does validate if regulates out-of-state transactions distillers who York. 579-580. (c) A "prospective" statute such Law—requiring current month be charged any same (as opposed previous ) month—directly Once distiller's posted York, must approval before item By defining (in view allowance program) differently can effectively force abandon program legal, alter their own regulatory schemes order permit without laws 582-584. 2. Twenty-first Amendment save Law's affirmative invalidation That gives authority control confers operates full whenever one sale alcoholic beverages another State. Moreover, interfere ability exercise Amendment. 584-585. 64 N.Y.2d 479, 490 N.Y.S.2d 128, 479 N.E.2d 764 (1985), reversed. MARSHALL, J., delivered opinion BURGER, C.J., POWELL O'CONNOR, JJ., joined, all but n. 6 BLACKMUN, joined. concurring opinion, post, p. 586. STEVENS, dissenting WHITE REHNQUIST, BRENNAN, took part decision case. Macdonald Flinn, City, appellant. Lloyd Edward Constantine, appellee. 575 Justice MARSHALL Court. 1 every producer at charges issue this case whether requirement 2 * extensively distribution borders. State's prohibits manufacture appropriate licenses, § 100(1) (McKinney 1970), terms sales, §§ 101-a 101-bbb 1970 Supp.1986). Distillers agents Authority. 101-b(3)(a). agent file 25th day each month, therein become effective first second following contain precise description intends sell, per-bottle per-case price. All wholesaler prices. 3 This litigation concerns 101-b(3)(d) files "the bottle set forth sold [distiller] District Columbia, (or agency) owns retail stores" covered schedule. Violation lead forfeiture bond connection license, 101-b(6). Twenty have similar laws.1 4 Appellant Brown-Forman Corp. (Brown-Forman) several brands Beginning 1978, has offered cash payments, "promotional allowances," credited amounts due appellant.2 use these advertising; however, amount receives tied quantity either wholesaler's advertising products. particular depend purchases, accepting constitute agreement purchase allowances, therefore, unconditional, lump-sum payments brands. 5 Authority payments.3 also determined, violated Law.4 accordingly Authority's courts, asserting was arbitrary unconstitutional. contended could possibly reflected precisely because there price." Each participating pay different given depending product had purchased argued, treat discounts. Were reduce would charging recognized thereby forcing violate way avoid dilemma stop unless chose laws. discontinue where argued regulated 7 rejected arguments, 100 App.Div.2d 55, 473 420 (1984), Appeals, (1985). concluded, first, consider discount supported substantial evidence. Second, court held applied rejecting speculative contention cannot comply simultaneously Finally, law, We noted probable jurisdiction question 474 814, 88 45 now reverse. II 8 adopted what two-tiered approach When discriminates commerce, when favor in-state interests interests, we generally struck down further inquiry. See, e.g., Philadelphia Jersey, 437 617, 98 2531, 57 2d 475 (1978); Shafer Farmers Grain Co., 268 189, 481, 69 909 (1925); Edgar MITE Corp., 457 624, 640-643, 102 2629, 2639-2641, 73 269 (1982) (plurality opinion). When, indirect evenhandedly, examined interest legitimate burden clearly exceeds benefits. Pike Bruce Church, 397 137, 142, 844, 847, 25 174 (1970). clear line separating category virtually per se invalid subject Church balancing approach. situation See Raymond Motor Transportation, Inc. Rice, 434 429, 440-441, 787, 793-94, 54 664 (1978). A. 9 dispute intoxicating liquors asserted interest—to assure possible residents—is legitimate. contends factors irrelevant, lowest-price falls direct regulations wholly forbids. so, contends, requiring affirm make argues, makes illegal period effect. constitutes commerce. disadvantages according sort "simple protectionism" routinely forbidden. supra, S.Ct., 2535. 10 If correctly characterized 528, 502, 1032 (1935); Schwegmann Brothers Giant Super Markets Louisiana Milk Comm'n, 365 F.Supp. 1144 (MD La.1973), aff'd, 416 922, 94 1920, 40 279 (1974). England Power Co. Hampshire, 455 331, 338, 1096, 1100, 71 188 (State require "that residents preferred right access, natural resources located borders"). Act. Act minimum milk banned resale been Cardozo's "establish wage scale states, . bar observed." Id., U.S., 503. in-state. Our inquiry, then, center B 11 once extraterritorial statute. Joseph E. Seagram & Sons, Hostetter, 384 35, 86 1254, 16 336 (1966), considered constitutionality, Supremacy Clauses, predecessor law. differed present version required elsewhere case, most important transactions. 42-43, 1259-1260. It "[t]he [the statute] geared appellants' pricing policies sufficient invalidate statute." distinguished concluding "largely matters conjecture," 1260. 12 relies Brewers Assn. Healy, 692 F.2d 275 (CA2 1982), summarily 464 909, 104 265, 78 248 (1983), seeking distinguish Seagram. Second Circuit Connecticut price-affirmation beer materially statute, like sellers post beginning proscribed deviation brewers low bordering based nature requirement. concluded made impossible brewer response market conditions so long Connecticut. doing, "regulate[d] conduct occurring outside state," F.2d, 279, affirmed summarily. C 13 agree Healy Connecticut's free change relevant month.5 Forcing merchant undertaking transaction 642, 2640 opinion); see 522, 500 (regulation tending "mitigate consequences competition between states" regulation). borders, residents, "project legislation into [other States] regulating paid" 521, 499. 14 addressed irrelevant "practical effect" Southern Pacific Arizona ex rel. Sullivan, 325 761, 775, 65 1515, 1523, 89 1915 (1945). practical speculative. undisputed counterintuitive, dissent maintains, 588, assume after taken stated purpose prohibition changes prevent discrimination among retailers, 101-b(1), (2)(a). goal conflict dissent's "whole purpose" means predicting how resolve conflict. know, forbade believed price-discrimination provisions. App. Juris. Statement 50a. us adopt flexible program, 589, despite refusal so. 15 proliferation Court's greatly multiplied likelihood seller subjected inconsistent obligations ease operations aptly demonstrated controversy gave rise lawsuit. Thus "project[ed] legislation" therein, supra.6 III finally Amendment, bans importation possession "in thereof," saves wide latitude territories, California Dealers Midcal Aluminum, 445 97, 107, 937, 944, 63 233 (1980). Therefore, valid authority. 17 well settled entirely remove alcohol reach Bacchus Imports, Ltd. Dias, 468 263, 3049, 82 200 (1984). Rather, "each light context issues stake concrete case." Hostetter Idlewild Bon Voyage 377 324, 332, 84 1293, 1298, 350 (1964). task, reconcile protected two constitutional 18 territory Section speaks "transportation delivery therein" beverages. transportation destined consumption foreign country, conclusion attempted consumed disposes issue. 19 them even directive risking goals deprive citizens opportunity reliance misplaced. Having found powers reverse judgment Appeals. 20 ordered. 21 BRENNAN 22 concurring. 23 I join (except footnote 6), go overrule (1966). relic past. decided statutes comparatively new overlapping potentially conflicting place last decades. principled distinction drawn analysis prospective retroactive upheld Seagram, doubt very much Member able perceive one. Either type, one's best efforts fine-tuning, affect failure merely preserves uncertainty breed necessitate litigation. should reality 24 whom REHNQUIST join, dissenting. Speculation about hypothetical cases illuminates discussion classroom, evidence historical provide illumination courtroom. Forgoing support record developed trial, Corporation (ABC) et seq. Supp.1986) unconstitutional "on face." Over years ago unanimously refused ground. As Stewart then explained: 26 "The scheme liquor, constitutionally domestic retailers country. serious discriminatory alleged appellants largely conjecture. clear, instance, inevitably produce claimed appellants, rather time enough assess arises presents them." 43, 1260, 27 Two decades elapsed since sentences written. interim, selling more 30 including Yet introduce prove affected State.1 28 lieu actual impact speculates prevents involving Brown-Forman's ante, 579-580, 582. result necessary consequence operation To begin with, far concerned maintain increase consistent promise "lowest 101-b(3)(d). Only reduces affirmation. But event, allows extend customers "for good cause shown reasons chapter." 101-b(3)(a).2 There nothing suggest ever object reduction conform price, counterintuitive would. whole all, obtained. Consistent purpose, has, situation, "offered grant offer equivalent discounts distiller] states." Gazzara, 610 673, 678, (SDNY), appeal docketed, 85-7547 (CA2, July 1, 1985). administrative flexibility belies assumption contrary. 582, 5. demonstrates wisdom unwillingness "presume discretion alleviate friction might chafe against" 46, 1261 (rejecting challenge predicated federal antitrust laws). Cf. id., 51, 1264. presumption constitutionality accords tradition—agencies frequently rectifying questionable applications necessarily general rules—it respect organs responsible whose challenged face. Vuitch, 402 62, 70, 91 1294, 601 (1971).3 And allow reason suppose turn refuse credit value list statutory recording States.4 29 Even open questions resolved favor, trenches follow (1935), primarily relies. invalidated ground designed inflate protect competition, 519, 498—a classic illustration provincialism.5 contrast, keep benefit competition. 38-39, 9, 1257-58, 9. obvious infirmity Seelig says us. Judge Friendly observed, "[f]or some 'present creation' Twenty-First aura unreality [the] examine validity just governing gasoline"—or, add, milk. Battipaglia 745 166, 168 1984), cert. denied, 470 1027, 105 1393, 782 article power exclude State;6 expressly authorizes market.7 explained unanimous Seagram: 31 "Consideration section that: 'The Territory, liquors, thereof, hereby prohibited.' consistently 'That bestowed upon states broad traffic territories.' Frankfort Distilleries, 324 293, 299 [65 661, 664, 951] [1945]. Nippert Richmond, 327 416, 425, 15, [66 586, 590, 760] [1946]. Just Terms occasion reiterate 'a totally unconfined traditional limitations restricts intoxicants use, distribution, borders.' 330 [84 1297, 350] [1964]. Board Equalization Young's Market 59 [57 77, 81 38] [1936]; Mahoney Triner 304 401 [58 952, 1424] [1938]; Ziffrin, Reeves, 308 132 [60 163, 128] [1939]; Washington, 358 [79 116, 106] [1958]. Indianapolis Brewing 305 391 [59 254, 83 243] S. Finch McKittrick, 395 256, 246] [1939]." 41-42, 1258-59.8 32 Of recent vintage, Capital Cities Cable, Crisp, 467 691, 712-713, 2694, 2707-2708, 580 (1984); Retail 110, 945, 33 true network spread across Nation created "so grave interference with" exceed "wide [state] regulation" Clause." 1259-60. ample available litigant developed. Until done, believe duty adhere Accordingly, respectfully dissent. These differ reference Some see, Ariz.Rev.Stat.Ann. 4-253(A) (Supp.1985). Others, known "control" distributed standard contract warrant Brief 5, 4. Bureau Alcohol, Tobacco Firearms (BATF), request, ruled Alcohol Administration Act, U.S.C. 201-211. 205(b) (prohibiting "paying crediting [any] retailer [of beverages] advertising" done induce person providing exclusion producers). features described herein BATF ensure 101-b(2)(b) "any discount, rebate, goods, inducement kind whatsoever" prompt-payment specified amounts). 101-b(3)(g) determining "appropriate reductions shall reflect rebates, inducements"). shown" 101-b(3)(a), lowers However, matter left solve problems inherent indulging sensitive concerns. Certainly company receive quite sure licenses granted course. Similarly, simply protections afforded grace agency. hold attach significance difference retrospective Indeed, argue markedly today's decision, address arise Because now, need continuing show "effectively Massachusetts below York" manner "designed circumvent Law." 51a. evidence, surely basis distinguishing Assn., escape clause. 276-277, nn. 6, 7. panel construed "to non-Connecticut Connecticut." 282. indulges unstated preceded 35-day notice Again, indicate notice. Amicus curiae Wine Spirits Wholesalers America, informs monopolies "perhaps typically" suppliers quoted remain days." Curiae 6. If, contracts, industry changed quarterly infrequent intervals normally announcement date months future, inhibiting whatsoever decisions. "In making argument, assumes, properly enforce regard reality, unwilling do. ". certainly reasonable expect recognize schedules adjusted, requirements, take account credits enjoyed elsewhere—credits receiving tangible benefits apparently already chosen engage speculation declare, tenuous basis, 133-34,.' " 489-490, 764, 769-770 (1985) (citations omitted). seem invalidating States' striking Vermont farmers price—instead price—and denied resell 520, Cardozo explained, "may his drink it, he not." 500. "New project paid acquired there. So disputed. equally prohibit introduction her wholesome quality Vermont, high ones. again disputed." Ibid. complies letter spirit imposes condition precedent pursuant literal fostering promoting temperance th[e] obedience law." 101-b(1). analysis, unsupported citation authority, appears war itself. understand access compliance (because affects States), yet York." Ante, 585. reading broadly encompass removing shield faintest ripples flow least interdependent national participates, gutted provision.

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