Court Opinion

ID: 9669968
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:11:46.407325+00
Date Added: 2024-06-11T18:16:01.397890
License: Public Domain

Clinton, J.,
dissenting.
I respectfully dissent from the opinion of my colleagues. It appears to me that the majority opinion judges not the constitutionality of the legislation, but its wisdom. It appears to declare the statute unconstitutional on the basis of subjective economic views as to the wisdom of unfettered competition among milk processors and distributors. The opinion makes assumptions which are either contrary to the evidence or which find no support in the bill of exceptions. It pays lip service to the appropriate principle, to wit: “Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the Legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty,” but disregards both the presumption of constitutionality and the evidence as well as the Legislature’s declaration of purpose. It would attribute to the judiciary the power to estab*103lish classifications by the court itself declaring two classes: “Efficient” and “inefficient” processors and distributors and gratuitously asserts that it is discriminatory as between them. This legislation does not establish such classes nor is there any evidence to establish the existence of such classes nor in which hypothetical category the plaintiff falls. Some processors may have costs which are less than others. It does not follow that some are therefore an “inefficient” class. That some processors because of their volume of sales and ability to make “volume purchasing of essential supplies,” as is mentioned in the opinion, does not make their competitors “inefficient.” It just makes them less able to compete. All this is mere argument accepted by the majority opinion but without support in the record. Such an arbitrary characterization by the court will enable it to declare almost any classification arbitrary and unreasonable.
The only evidence introduced by the plaintiff1 is that shown in affidavits which are exhibits 13,14, and 15. The essence of exhibit 13 is expressed in the following conclusion: Therefore plaintiff and his competitors can only compete on the following items: Types of produce packaging, advertising, quality of service, and the shelf price of the finished product. Exhibits 14 and ,15 seem to support the conclusion that the 1962 to 1972 gasoline price stayed the same where dairy products went up. The defendants introduced a great deal of evidence pertaining to the necessity of additional legislation. None of which supports the conclusions of the opinion.
The trial court found: “D. The Act is presumed to be constitutional and the evidence presented herein fails to overcome this presumption of constitutionality.”
I submit that the statute is not unconstitutional on its face and that the recital in the opinion six separate times that certain key conclusions are either “obvious” or “apparent” are' neither obvious nor apparent, have no evidentiary support, and depend on the a priori *104acceptance of certain economic views as to what type of competition is desirable in the milk processing and distributing industry and what the effects of the act will be.
The legislative purpose is set forth in part in the statute as follows: “Certain trade practices are now being carried on in the sale of dairy products which are unfair and unjust, which have already driven numerous firms out of business, and which if continued will jeopardize the public interest in securing a sufficient supply of properly prepared dairy products and in preserving the dairy industry of this state free from monopolistic and anticompetitive influences.” § 81-263.38, R. R. S. 1943. The opinion recites: “Inherent in the vice of forcing plaintiff to sell at the minimum basic cost of the average of its most inefficient competitors is the discrimination it suffers in comparison with some of the national milk chains.” No evidence supports the statement that plaintiff will be forced to sell “at the minimum basic cost of the average of its most inefficient competitors(Emphasis supplied.) The act itself provides: “. . . to determine the minimum basic cost to the distributor, which shall be a weighted average of such costs of distributors and others within this state engaged in processing dairy products sold within this state, and the minimum basic cost to the jobber, which shall be a weighted average of such costs of jobbers, of the various dairy products.” It is the weighted average of the costs of all distributors which is to be determined and not as the opinion recites, “the cost of the average of its most inefficient competitors.” Indeed there is nothing in the evidence to enable us to tell where the plaintiff stands in the scale of efficiency except for whatever conclusions one might draw from the fact that the plaintiff appears to have been successful and is growing, and is one of a rapidly decreasing class of processors and distributors.
The record establishes that in 1950 Nebraska had 151 *105milk processors and ice cream manufacturers; in 1963 that number had dropped to 55; in 1972 the number was 17. These figures are not challenged. It is apparent that under the existing system monopoly is growing and competition is being eliminated. The Legislature concluded and the evidence supports the proposition that this situation resulted from “milk wars” particularly in populous eastern Nebraska. Expert witnesses through affidavit testified that if “milk wars” are allowed to continue they “could destroy many full service dairies with the result that the consumers and dairy farmers would be hurt as well as full service processors in the price war markets.” Also: A “completely unregulated market apparently has not worked satisfactorily in Nebraska due to changes in the industry and its economics, the impact created by chainstore merchandizing and producer cooperative processing.” And also that producers have been unable to “cope” with this competitive situation, and affiant is of the opinion “that some form of Government regulation is not only necessary to guarantee a supply of fluid milk products for the consumer in Nebraska, but that in the public interest such laws aré absolutely necessary.”
The majority opinion states: “Plaintiff’s evidence would indicate that rather than freeing the state from monopolistic influences it [the statute] would create monopoly by permitting large processors to become even larger.” There is not anything in the record to support the above conclusion. The opinion says: “It is obvious . . . that the primary purpose of the act is to establish a price control regardless of the cost of production.” Here it would seem the court is playing with words. First, it seems there could have been at least two “primary” reasons for this act, including: (1) The fact that the state had been unable to establish, under the previous statute, a processors “actual” cost and this act creates an easier way to prove violations by making it illegal to sell below a fixed price rather *106than actual cost; and (2) a purpose to protect the dairy industry from the loss of more processors. The majority opinion states: “If the intent were otherwise a prohibition against each operator selling below his cost of production would permit all producers to compete on an equal basis.” Two comments are pertinent: (1) Apparently making the producer’s own cost the basis of determining the violation under previous legislation had not achieved the Legislature’s purpose. Thus the pressure for new legislation. (2) It also appears that under the existing system the desired legislative result was not being achieved.
The Legislature may be right. It may be wrong. The effect of the majority opinion is to say to the Legislature, “This court knows best.”
Regulations and statutes similar to those involved here have long been upheld as being constitutional. Nebbia v. New York, 291 U. S. 502, 54 S. Ct. 505, 78 L. Ed. 940, 89 A. L. R. 1469 (1933), is the leading case on the point and has been followed many times. The New York Legislature, after extensive hearings, had found that the price of milk being paid New York producers was below the cost of production, and that such conditions if allowed to continue might jeopardize (1) the wholesome nature of the product, and (2) the industry itself, thus ending the supply of a product determined essential to the public health.
The appellant in that case was convicted of violating a portion of the act making the selling of milk at a price below levels established by the administrative board a crime. The appellant first challenged the act on the grounds that it violated equal protection of the laws. The court said: “It is shown that the order requires him, if he purchases his supply from a dealer, to pay eight cents per quart and five cents per pint, and to resell at not less than nine and six, whereas the same dealer may buy his supply from a farmer at lower prices and deliver milk to consumers at ten cents the *107quart and six cents the pint. We think the contention that the discrimination deprives the appellant of equal protection is not well founded. For aught that appears, the appellant purchased his supply of milk from a farmer as do distributors, or could have procured it from a farmer if he so desired. There is therefore no showing that the order placed him at a disadvantage, or in fact affected him adversely, and this alone is fatal to the claim of denial of equal protection. But if it were shown that the appellant is compelled to buy from a distributor, the difference in the retail price he is required to charge his customers, from that prescribed for sales by distributors, is not on its face arbitrary or unreasonable, for there are obvious distinctions between the two sorts of merchants which may well justify a difference of treatment, if the legislature possesses the power to control the prices to be charged for fluid milk. Compare American Sugar Refining Co. v. Louisiana, 179 U. S. 89; Brown-Forman Co. v. Kentucky, 217 U. S. 563; State Board of Tax Commissioners v. Jackson, 283 U. S. 527.” (Emphasis supplied.)
Appellant next challenged the statute on the ground that it violated due process: “The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort of business, or in given circumstances, may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts” (Emphasis supplied.)
*108The court noted that under the milk order there questioned the New York Legislature recognized differences in underlying cost should be reflected in the price charged. “In the order of which complaint is made the Milk Control Board fixed a price of ten cents per quart for sales by a distributor to a consumer, and nine cents by a store to a consumer, thus recognizing the lower costs of the store, and endeavoring to establish a differential which would be just to both. In the light of the facts the order appears not to be unreasonable or arbitrary, or without relation to the purpose to prevent ruthless competition from destroying the wholesale price structure on which the farmer depends for his livelihood, and the community for an assured supply of milk.”
We here interject that the legislative determination that the welfare of the milk producers requires the preservation of substantial number of milk processors is not patently unreasonable or arbitrary.
Regarding the question of due process, the court, in Nebbia v. New York, supra, continued: “So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio. ‘Whether the free operation of the normal laws of competition is' a wise and wholesome rule for trade and commerce is an economic question which this court need not consider or determine.’ Northern Securities Co. v. United States, 193 U. S. 197, 337-8. And it is equally clear that if the *109legislative policy be to curb unrestrained and harmful competition by measures which are not arbitrary or discriminatory it does not lie with the courts to determine that the rule is unwise. With the wisdom of the policy adopted, with the adequacy or practicability of the law enacted to forward it, the courts are both incompetent and unauthorized to deal. The course of decision in this court exhibits a firm adherence to these principles. Times without number we have said that the Legislature is primarily the judge of the necessity of such an enactment, that every possible presumption is in favor of its validity, and that though the court may hold views inconsistent with the wisdom of the law, it may not be annulled unless palpably in excess of legislative power.” (Emphasis supplied.)
The matters involved come clearly within the legislative purview. The legislation treats all processors and distributors the same. The regulation is not “demonstrably irrelevant to the policy the Legislature is free to adopt.” Nebbia v. New York, supra.