Appellants, distillers, wholesalers, or importers of distilled
spirits, sued in a New York court to enjoin enforcement principally
of § 9 of Chapter 531, 1964 Session Laws of New York, and to secure
a declaratory judgment of its unconstitutionality under the
Commerce Clause, the Supremacy Clause, and the Due Process and
Equal Protection Clauses of the Fourteenth Amendment. Section 9,
part of a sweeping redirection of New York's policy regulating the
sale of liquor in the State, requires that monthly price schedules
for sales to wholesales and retailers filed with the State Liquor
Authority must be accompanied by an affirmation that the bottle and
case price of liquor is "no higher than the lowest price" at which
sales were made anywhere in the country in the preceding month by
the brand owner, his agent, or a "related person." The latter term
includes any person a substantial part of whose business is the
sale of brand liquor purchased from the brand owner or his agent.
Consequently, before a "related person" wholesaler may sell brand
liquor to a New York retailer, he must secure an affirmation from
the brand owner or his agent that the price charged does not exceed
the lowest price at which the brand was sold to any retailer in any
other part of the country by any wholesaler doing "substantial"
business with the brand owner. A brand owner doing business in New
York must therefore keep himself informed of prices charged by all
"related persons" throughout the country. Affirmations by a person
other than a brand owner, his agent, or a "related person" need
only cover sales elsewhere by the person filing the schedule. The
trial court's judgment upholding the constitutionality of the law
was affirmed on appeal. Because of various stays, § 9 has not gone
into effect.
Held:
1. The provisions of § 9 do not, on their face,
unconstitutionally burden interstate commerce in violation of the
Commerce Clause. Pp.
384 U. S.
41-45.
(a) The Twenty-first Amendment, while not operating totally to
repeal the Commerce Clause, affords wide latitude to the States in
the area of liquor control. P.
384 U. S.
42.
Page 384 U. S. 36
(b) New York's requirement that liquor prices to domestic
wholesalers and retailers be as low as prices offered elsewhere in
the country is not unconstitutional. P.
384 U. S.
43.
(c) The effects of § 9 on appellants' business outside New York
are largely conjectural. P.
384 U. S.
43.
2. The bare compilation of price information on liquor sales to
wholesalers and retailers does not, of itself, violate the
Supremacy Clause by conflicting with the Sherman Act or the
Robinson-Patman Act; any potential conflict with the latter Act is
speculative on this record, and could be alleviated by the Liquor
Authority's discretionary power under § 7 to change schedule
requirements. Pp.
384 U. S.
45-46.
3. The imposition of state maximum liquor price legislation to
deal with the previous resale price maintenance system under which
the distillers had exclusive price-fixing powers did not constitute
an abuse of legislative discretion in violation of the Due Process
Clause. The wisdom of such legislation is not a matter of judicial
concern. Pp.
384 U. S.
46-48.
4. The statutory definition of "related person" does not violate
due process requirements by being unconstitutionally vague. Pp.
384 U. S.
48-50.
(a) Where the determination of "related person" status is
unclear, the Liquor Authority can be asked for clarification. P.
384 U. S.
49.
(b) The number of wholesalers through whom distillers deal being
relatively limited, it is not unduly burdensome on the face of § 9
for the distillers to determine the "related person" wholesalers
and their prices. Pp.
384 U. S.
49-50.
5. The exception of consumer sales and private label liquor
brands from § 9's "no higher than the lowest price" requirement ,
and the reduced scope of price affirmations made concerning sales
by non-"related persons" do not invidiously discriminate in
violation of the Equal Protection Clause. The legislature could
reasonably have believed that prices charged by those not covered
by §9 would follow the reduced prices charged by distillers and
"related persons," and that consumer prices would adequately
reflect the reductions at the other levels. Pp.
384 U. S.
50-51.
6. Provisions in § 7, also challenged by appellants, which
require that price schedules be filed to cover sales to wholesalers
"irrespective
Page 384 U. S. 37
of the place of sale or delivery," and that schedules on sales
to both wholesalers and retailers include "the net bottle and case
price paid by the seller," are constitutional as serving a
legitimate interest to regulate New York sales and, as construed by
the New York Court of Appeals, can be waived by the Liquor
Authority if unrelated to such sales. Pp.
384 U.S. 51-52.
16
N.Y.2d 47, 109 N.E.2d 701, affirmed.
MR. JUSTICE STEWART delivered the opinion of the Court.
This appeal draws in question certain provisions of Chapter 531,
1964 Session Laws of New York, which worked substantial changes in
the State's Alcoholic Beverage Control Law. The appellants are
distillers, wholesalers, or importers of distilled spirits, who
commenced this action in a New York court for an injunction and
declaratory judgment against the appropriate state officials, upon
the ground that § 9 of Chapter 531 violates the Federal
Constitution in several respects. [
Footnote 1] The trial court upheld the constitutionality
of the law, [
Footnote 2] and
its
Page 384 U. S. 38
judgment was affirmed by the Appellate Division [
Footnote 3] and by the New York Court of
Appeals. [
Footnote 4] The
appellants brought the case here, [
Footnote 5] and we now affirm the judgment of the Court of
Appeals.
Chapter 531 was enacted as the result of a sweeping redirection
of New York's policy regulating the sale of liquor in the State.
For more than 20 years, the Alcoholic Beverage Control Law
(hereinafter ABC Law) had required brand owners of alcoholic
beverages or their agents to file with the State Liquor Authority
monthly schedules listing the bottle and case price to be charged
to wholesalers and retailers within the State. These schedules were
publicly displayed, and sales were prohibited except at the listed
prices. [
Footnote 6] In 1950,
the ABC Law was amended by the addition of a section which required
brand owners or their agents to file price schedules listing the
minimum retail price at which each brand could be sold to consumers
and which prohibited retail sales at prices less than those fixed
in the schedules. [
Footnote 7]
The enforcement of these mandatory minimum retail prices was
entrusted to the State Liquor Authority, rather than to private
action, but the Authority was given no power to determine the
reasonableness of the prices that were fixed.
In 1963, against a background of irregularities within the State
Liquor Authority and extensive dissatisfaction with the operation
of the ABC Law, the Governor of New York appointed a Commission to
study the sale and distribution of alcoholic beverages within the
State. The
Page 384 U. S. 39
Commission sponsored various study papers and issued a series of
reports and recommendations. [
Footnote 8] It found unequivocally that compulsory resale
price maintenance had had
"no significant effect upon the consumption of alcoholic
beverages, upon temperance or upon the incidence of social problems
related to alcohol."
It also found that New York liquor consumers had been the
victims of serious discrimination because of the higher prices and
reduced competition fostered by the mandatory minimum price
maintenance provision of the law. [
Footnote 9] The Commission therefore recommended the
repeal of that provision, [
Footnote 10] and the ultimate response of the legislature
was the enactment of Chapter 531.
The legislature did not stop, however, with repeal of the
mandatory resale price maintenance provision of the law. [
Footnote 11] In § 9 of Chapter 531,
it imposed the additional requirement that the monthly price
schedules for sales to wholesalers and retailers filed with the
State Liquor Authority must be accompanied by an affirmation that
"the bottle and case price of liquor . . . is no higher than the
lowest price" at which sales were made anywhere in
Page 384 U. S. 40
the United States during the preceding month. It is this
provision that is the principal object of the appellants'
constitutional attack in this litigation.
Section 9 effects the "no higher than the lowest price"
requirement by the addition of paragraphs (d)-(k) to § 101-b, subd.
3, of the ABC Law. The affirmation required by paragraph (d), which
must be filed and verified by brand owners or their agents who sell
to wholesalers in New York, must cover all sales to wholesalers
anywhere in the United States by the brand owner, his agent, or any
"related person." The less extensive affirmation required by
paragraph (e), which applies to persons other than brand owners or
their agents who file schedules for sales to wholesalers, need only
cover sales elsewhere by the person filing the schedule. The
affirmation required by paragraph (f), which must be filed by brand
owners, their agents, or "related persons" who sell to retailers in
New York, must be verified by the brand owner or his agent and must
cover all sales to retailers anywhere in the United States by the
brand owner, his agent, or any "related person." The less extensive
affirmation required by paragraph (g), which applies to wholesalers
who are not "related persons," need only cover sales elsewhere by
the person filing the schedule. [
Footnote 12]
The term "related person" is defined in paragraphs (d) and (f)
to include any person, the "exclusive, principal or substantial
business of which is the sale of a brand or brands of liquor
purchased from" the brand owner or his agent. In consequence,
before a "related person"
Page 384 U. S. 41
wholesaler may sell a particular brand of liquor to a New York
retailer, he must secure an affirmation from the brand owner or his
agent that the price charged by the wholesaler is no higher than
the lowest price at which the brand was sold to any retailer in any
other part of the country by any wholesaler doing "substantial"
business with the brand owner. Thus, a brand owner doing business
in New York must keep himself informed of the prices charged by all
"related persons" throughout the United States.
The scheme of § 9 of Chapter 531 is rounded out by the addition
to § 101-b, subd. 3 of the ABC Law of paragraph (h), which
prohibits sales to wholesalers and retailers of brands for which no
affirmation has been filed; paragraph (i), which requires the
"lowest price" to reflect all discounts and other allowances to
wholesalers and retailers, with the exception of state taxes and
delivery costs; and paragraphs (j) and (k), which impose criminal
penalties for the filing of a false affirmation.
As a result of a series of stays granted throughout this
litigation, the provisions of § 9 have not yet been put into
effect. Our concern here, therefore, is only with the
constitutionality of those provisions on their face. The appellants
attack § 9 on many constitutional fronts. They contend that its
provisions place an illegal burden upon interstate commerce,
conflict with federal antitrust legislation and thus fall under the
Supremacy Clause, and violate both the Due Process Clause and the
Equal Protection Clause of the Fourteenth Amendment. We find all
these contentions without merit.
Consideration of any state law regulating intoxicating beverages
must begin with the Twenty-first Amendment, the second section of
which provides that:
"The transportation or importation into any State, Territory, or
possession of the United States for delivery or use therein of
intoxicating liquors, in violation of the laws thereof,
Page 384 U. S. 42
is hereby prohibited."
As this Court has consistently held, "[t]hat Amendment bestowed
upon the states broad regulatory power over the liquor traffic
within their territories."
United States v. Frankfort
Distilleries, 324 U. S. 293,
324 U. S. 299.
Cf. Nippert v. City of Richmond, 327 U.
S. 416,
327 U. S. 425,
n. 15. Just two Terms ago, we took occasion to reiterate that
"a State is totally unconfined by traditional Commerce Clause
limitations when it restricts the importation of intoxicants
destined for use, distribution, or consumption within its
borders."
Hostetter v. Idlewild Bon Voyage Liquor Corp.,
377 U. S. 324,
377 U. S. 330.
See State Board of Equalization of California v. Young's Market
Co., 299 U. S. 59;
Mahoney v. Joseph Triner Corp., 304 U.
S. 401;
Ziffrin, Inc. v. Reeves, 308 U.
S. 132;
California v. Washington, 358 U. S.
64.
Cf. Indianapolis Brewing Co. v. Liquor Control
Comm., 305 U. S. 391;
Joseph S. Finch & Co. v. McKittrick, 305 U.
S. 395. As the
Idlewild case made clear,
however, the second section of the Twenty-first Amendment has not
operated totally to repeal the Commerce Clause in the area of the
regulation of traffic in liquor. In
Idlewild, the ultimate
delivery and use of the liquor was in a foreign country, and the
Court held that, under those circumstances, New York could not
forbid sales made under the explicit supervision of the United
States Customs Bureau, pursuant to laws enacted by Congress under
the Commerce Clause for the regulation of commerce with foreign
nations.
Cf. Dept. of Alcoholic Beverage Control. v. Ammex
Warehouse Co., 378 U. S. 124;
Collins v. Yosemite Park & Curry Co., 304 U.
S. 518.
Unlike
Idlewild, the present case concerns liquor
destined for use, distribution, or consumption in the State of New
York. In that situation, the Twenty-first Amendment demands wide
latitude for regulation by the State. We need not now decide
whether the mode of liquor regulation chosen by a State in such
circumstances could ever constitute so grave an interference with
a
Page 384 U. S. 43
company's operations elsewhere as to make the regulation invalid
under the Commerce Clause. [
Footnote 13]
See Baldwin v. G.A.F. Seelig,
294 U. S. 511. No
such situation is presented in this case. The mere fact that § 9 is
geared to appellants' pricing policies in other States is not
sufficient to invalidate the statute. As part of its regulatory
scheme for the sale of liquor, New York may constitutionally insist
that liquor prices to domestic wholesalers and retailers be as low
as prices offered elsewhere in the country. The serious
discriminatory effects of § 9 alleged by appellants on their
business outside New York are largely matters of conjecture. It is
by no means clear, for instance, that § 9 must inevitably produce
higher prices in other States, as claimed by appellants, rather
than the lower prices sought for New York. It will be time enough
to assess the alleged extraterritorial effects of § 9 when a case
arises that clearly presents them.
"The mere fact that state action may have repercussions beyond
state lines is of no judicial significance so long as the action is
not within that domain which the Constitution forbids."
Osborn v. Ozlin, 310 U. S. 53,
310 U. S. 62.
Cf. Hoopeston Canning Co. v. Cullen, 318 U.
S. 313;
South Carolina State Highway Dept. v.
Barnwell Bros., 303 U. S. 177,
303 U. S. 189;
Baldwin v. G.A.F. Seelig, 294 U.
S. 511,
294 U. S.
528.
Moreover, as the Court of Appeals observed, the regulatory
procedure followed by New York is comparable to that practiced by
those States, 17 in number, in which liquor is sold by the State
itself, and not by private enterprise. Each of these monopoly
States, we are told, requires distillers to warrant that the price
charged the
Page 384 U. S. 44
State is no higher than the price charged in other States. In at
least one of these States, the distillers are required to adjust
the sales price to include all rebates and other allowances made to
purchasers elsewhere, and the State has taken positive precautions
to insure that the contractual commitments are fulfilled. [
Footnote 14] In some respects
Page 384 U. S. 45
the burden of gathering information for the warranties made to
the monopoly States may be more onerous than that required for the
affirmations under § 9, since the warranties generally cover prices
in other States at the very time of sale to the monopoly State,
whereas the affirmations filed under § 9 cover prices charged
elsewhere during the preceding month.
We therefore conclude that the provisions of § 9, on their face,
place on unconstitutional burden on interstate commerce.
The appellants' contention that § 9 violates the command of the
Supremacy Clause needs no extended discussion. The argument is
based upon a claimed inconsistency between § 9 and the federal
antitrust laws, specifically the Sherman Act, 26 Stat. 209, as
amended, 15 U.S.C. §§ 1-7 (1964 ed.), and § 2 of the Clayton Act,
38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526,
15 U.S.C. § 13 (1964 ed.).
In this as in other areas of coincident federal and state
regulation, the "teaching of this Court's decisions . . . enjoin[s]
seeking out conflicts between state and federal regulation where
none clearly exists."
Huron Portland Cement Co. v. City of
Detroit, 362 U. S. 440,
362 U. S. 446.
We find no such clear conflict in the present case. The bare
compilation, without more, of price information on sales to
wholesalers and retailers to support the affirmations filed with
the State Liquor Authority would not, of itself, violate the
Sherman Act.
Maple Flooring Mfrs. Assn. v. United States,
268 U. S. 563,
268 U. S.
582-586;
cf. American Column & Lumber Co. v.
United States, 257 U. S. 377.
Section 9 imposes no irresistible economic pressure on the
appellants to violate the Sherman Act in order to comply with the
requirements of § 9. On the contrary, § 9 appears firmly anchored
to the assumption that the Sherman Act will deter any attempts by
the appellants to preserve their New York price level by conspiring
to raise the prices at which liquor is sold elsewhere
Page 384 U. S. 46
in the country. Nothing in the Twenty-first Amendment, of
course, would prevent enforcement of the Sherman Act against such a
conspiracy.
United States v. Frankfort Distilleries,
324 U. S. 293,
324 U. S.
299.
Although it is possible to envision circumstances under which
price discriminations proscribed by the Robinson-Patman Act might
be compelled by § 9, the existence of such potential conflicts is
entirely too speculative in the present posture of this case to
support the conclusion that New York is foreclosed from regulating
liquor prices in the manner it has chosen. [
Footnote 15] Moreover, § 7 of Chapter 531 has
amended the ABC Law by granting to the State Liquor Authority ample
discretion to modify the schedule requirements. [
Footnote 16] We cannot presume that the
Authority will not exercise that discretion to alleviate any
friction that might result should the ABC Law chafe against the
Robinson-Patman Act or any other federal statute.
There remain for consideration the appellants' Fourteenth
Amendment claims. Section 9, they say, violates the Due Process
Clause in two respects -- first because it imposes an
"unreasonable, arbitrary and capricious" burden upon them, and
second because the statutory definition of "related person" is so
vague as to be constitutionally intolerable. And § 9 violates the
Equal Protection Clause, they say, because it arbitrarily
discriminates among various segments of the liquor industry.
The first contention amounts to a claim of a deprivation of due
process of law, based on the argument that
Page 384 U. S. 47
§ 9 is not designed to promote temperance, and that it is an
unwise, impractical, and oppressive law. But it is not
"the province of courts to draw on their own views as to the
morality, legitimacy, and usefulness of a particular business in
order to decide whether a statute bears too heavily upon that
business and by so doing violates due process. Under the system of
government created by our Constitution, it is up to legislatures,
not courts, to decide on the wisdom and utility of legislation.
There was a time when the Due Process Clause was used by this Court
to strike down laws which were thought unreasonable, that is,
unwise or incompatible with some particular economic or social
philosophy. . . . The doctrine . . . that due process authorizes
courts to hold laws unconstitutional when they believe the
legislature has acted unwisely . . . has long since been discarded.
We have returned to the original constitutional proposition that
courts do not substitute their social and economic beliefs for the
judgment of legislative bodies, who are elected to pass laws. . .
."
Ferguson v. Skrupa, 372 U. S. 726,
372 U. S.
728-730.
Moreover, nothing in the Twenty-first Amendment or any other
part of the Constitution requires that state laws regulating the
liquor business be motivated exclusively by a desire to promote
temperance. [
Footnote 17]
The announced purpose of the legislature was to eliminate
"discrimination against and disadvantage of consumers" in the
State. [
Footnote 18]
Frustrated by years of unhappy experience
Page 384 U. S. 48
with a state-enforced mandatory resale price maintenance system
that placed exclusive price-fixing power in the hands of the
distillers, the legislature adopted § 9 as the core of the liquor
price reform contemplated by Chapter 531. We cannot say that the
legislature acted unconstitutionally when it determined that only
by imposing the relatively drastic "no higher than the lowest
price" requirement of § 9 could the grip of the liquor distillers
on New York liquor prices be loosened. [
Footnote 19] In a variety of cases in areas no more
sensitive than that of liquor control, this Court has upheld state
maximum price legislation.
See Nebbia v. New York,
291 U. S. 502;
Townsend v. Yeomans, 301 U. S. 441;
O'Gorman & Young v. Hartford Fire Ins. Co.,
282 U. S. 251;
Gold v. DiCarlo, 380 U. S. 520.
The statutory definition of "related person," which the
appellants attack as unconstitutionally vague, includes any
person
"the exclusive, principal or substantial business of which is
the sale of a brand or brands of liquor purchased from such brand
owner or wholesaler designated as agent. . . ."
The claim of vagueness is centered
Page 384 U. S. 49
upon the term "principal or substantial." We cannot agree that
that language is so vague as to be constitutionally invalid. The
Deputy Commissioner of the State Liquor Authority testified in
these proceedings that, where the determination of "related
persons" is unclear, the appellants will have access to the
Authority for a ruling to clarify the issue. [
Footnote 20] As the Court said in
Board of
Governors v. Agnew, 329 U. S. 441,
329 U. S.
449,
". . . we think it plain under our decisions that, if
substantiality is the statutory guide, the limits of administrative
action are sufficiently definite or ascertainable so as to survive
challenge on the grounds of unconstitutionality."
Cf. Opp Cotton Mills v. Administrator, 312 U.
S. 126,
312 U. S.
142-146;
Bowles v. Willingham, 321 U.
S. 503,
321 U. S.
512-516.
Further, as the record indicates, the structure of the liquor
industry is such that even the largest national distillers deal
through a relatively limited number of wholesalers. [
Footnote 21] Frequently, a wholesaler
agrees with a distiller not to sell brands of competing distillers
in the same price range, and the prices charged by these
wholesalers are potentially subject to the influence of the
distillers. [
Footnote 22] We
cannot say, therefore, that § 9, on its face, imposes an
unconstitutional burden on distillers or wholesalers in
ascertaining the wholesalers who satisfy the
Page 384 U. S. 50
"related person" criterion or in obtaining information on prices
charged by such wholesalers.
We come, then, to the appellants' argument that § 9 violates the
Equal Protection Clause. That argument is based upon the claim that
it was arbitrary for the legislature to except consumer sales and
private label brands of liquor from the "no higher than the lowest
price" requirement of § 9, and to reduce the scope of the price
affirmation required with respect to sales made to wholesalers and
retailers by those who are not "related persons."
We do not find that these differentiations constitute invidious
discrimination. The legislature could reasonably have believed
that, once the prices on sales by distillers and "related persons"
were reduced, the prices of private label brands and brands sold by
non-"related persons" would follow suit. Nor was it necessary for
the legislature to impose the "no higher than the lowest price"
requirement on sales by retailers to consumers. The legislature
might reasonably have concluded that consumer prices would
adequately reflect the reductions in prices to wholesalers and
retailers accomplished by § 9, even though the state fair trade
statute, which permits private resale price maintenance agreements
on sales to consumers, appears to have emerged unscathed by the
enactment of Chapter 531. [
Footnote 23]
"A statute is not invalid under the Constitution because it
might have gone farther than it did, or because it may not succeed
in bringing about the result that it tends to produce."
Roschen
v.
Page 384 U. S. 51
Ward, 279 U. S. 337.
"[T]he reform may take one step at a time, addressing itself to the
phase of the problem which seems most acute to the legislative
mind."
Williamson v. Lee Optical Co., 348 U.
S. 483,
348 U. S.
489.
Although the appellants' primary attack is upon the
constitutionality of § 9, they also challenge two minor provisions
added by § 7 of Chapter 531 to the schedule requirements of the ABC
Law. The first provision, which requires the price schedules to
cover sales to wholesalers "irrespective of the place of sale or
delivery," is designed to bring wholesalers within the price
publicity requirement of the law, even though they take delivery of
the liquor outside New York for distribution within the State. The
second provision, which requires the price schedules on sales to
both wholesalers and retailers to include "the net bottle and case
price paid by the seller," tends to promote publicity of the
seller's profit margins. [
Footnote 24] There is no indication in the present record
that the State Liquor Authority will require the appellants to file
schedules of prices on sales unrelated to the distribution of
liquor in New York. As the Court of Appeals observed with regard to
these provisions,
"The statute is concerned with New York practices and, if the
sales in other States have no relevancy to New York enforcement,
the statute permits the Liquor Authority for good cause to waive
the general prohibition against sales to wholesalers in the absence
of such schedules. It would be reasonable to expect that the
statute would be administered consistently with its sole purpose to
regulate the intrastate sale of liquor."
16
N.Y.2d 47, 59, 262 N.Y.S.2d 75, 82, 209 N.E.2d 701, 706. We
accept this construction of the statute by New York's highest
court.
NAACP v.
Button, 371
Page 384 U. S. 52
U.S. 415,
371 U. S. 432.
As so construed, these provisions serve a clear and legitimate
interest of New York in the exercise of its constitutional power to
regulate the sale of liquor within its borders.
For the reasons that we have stated, we find no constitutional
infirmity in any of the 1964 amendments to the New York ABC Law
challenged on this appeal. Although it is possible that specific
future applications of Chapter 531 may engender concrete problems
of constitutional dimension, it will be time enough to consider any
such problems when they arise. We deal here only with the statute
on its face. And we hold that, so considered, the legislation is
constitutionally valid. Accordingly, the judgment of the New York
Court of Appeals is affirmed.
Affirmed.
[
Footnote 1]
The appellants also challenged two minor provisions of § 7 of
Chapter 531, 1964 Session Laws of New York.
See pp.
384 U.S. 51-52,
infra. The relevant provisions of §§ 7, 8 and 9 of Chapter
531 are set out in the
384 U.S.
35app|>Appendix to this opinion.
[
Footnote 2]
45 Misc.2d 956, 258 N.Y.S.2d 442.
[
Footnote 3]
23 A.D.2d 933, 259 N.Y.S.2d 644.
[
Footnote 4]
16
N.Y.2d 47, 209 N.E.2d 701, 262 N.Y.S.2d 75.
[
Footnote 5]
382 U.S. 924.
[
Footnote 6]
Laws 1942, c. 899, § 1, Alcoholic Beverage Control Law, §§
101-b, subd. 3(a)-(d) (1946 ed.).
[
Footnote 7]
Laws 1950, c. 689, § 1, Alcoholic Beverage Control Law, § 101-c
(1964 Supp.).
[
Footnote 8]
See New York State Legislative Annual 401-408, 484-489,
498-500 (1964); Breuer, Moreland Act Investigations in New York:
1907-65, pp. 131-169 (1965). The Commission's Study Paper Number 5
("Resale Price Maintenance in the Liquor Industry") and Report and
Recommendations No. 3 ("Mandatory Resale Price Maintenance") are
part of the record in this case.
[
Footnote 9]
Based upon the comparative price data it assembled, including
examples of wholesale liquor prices in New York higher than retail
prices elsewhere, the Commission concluded that, because of the
mandatory resale price maintenance provision, New Yorkers were
subsidizing the liquor industry by $150,000,000 a year.
[
Footnote 10]
The Commission made various other recommendations, including
relaxation of certain restrictions on package store licenses and
elimination of some of the conditions imposed on establishments
serving liquor by the drink.
[
Footnote 11]
The mandatory resale price maintenance provision, § 101-c, was
repealed by § 11 of Chapter 531.
[
Footnote 12]
Sellers seeking to take advantage of the milder affirmations
required by paragraphs (e) and (g) must file a representation that
they are not "related persons."
See Alcoholic Beverage
Control Law, Appendix, Rule 16 of the State Liquor Authority, §
65.7(e) (1965 Supp.), 9 NYCRR 65.7(e). The schedule requirements of
§ 101-b do not apply to sales of private label brands of liquor.
Alcoholic Beverage Control Law, § 101-b, subd. 3(c).
[
Footnote 13]
Cf. United States v. Frankfort Distilleries,
324 U. S. 293,
324 U. S. 299,
where we stated that the Twenty-first Amendment
"has not given the states plenary and exclusive power to
regulate the conduct of persons doing an interstate liquor business
outside their boundaries."
See also Note, The Twenty-first Amendment Versus the
Interstate Commerce Clause, 55 Yale L.J. 815 (1946).
[
Footnote 14]
The executive vice-president of one of the appellants testified
that
"We and other distillers have freely entered into contracts with
these monopoly states in which we warrant that the f.o.b. prices at
which our brands are offered to those states are no higher than the
lowest price at which we sell in other states."
The Deputy Commissioner of the State Liquor Authority testified
that,
"in a number of other States,
e.g., in the State of
Pennsylvania, some of these same plaintiffs have been warranting
for some time past that the price quoted to the Pennsylvania Liquor
Control Board is 'the lowest current price quoted to any other
customer,' or 'to any purchaser, dealer, agent or agency of any
nature or kind anywhere in the United States of America.' The same
witness later added that,"
"as part and parcel of the offerings of their products in, for
example, the State of Pennsylvania, they warrant that, 'if and when
special cash or commodity allowances, post-offs or discounts are
offered to purchasers in any other State or the District of
Columbia, the same' shall also be offered the Pennsylvania Liquor
Control Board."
The Chairman of the Commission testified at a public hearing
before a joint legislative committee that
"[w]e have, for example, the State of Pennsylvania, which is the
largest purchaser of liquor in the world. I think they purchase
almost $400,000,000 worth of liquor a year -- one customer. They
swing a very big bit of leverage, and you cannot be convinced that
that Pennsylvania customer does not insist on the lowest price that
the distiller offers anywhere in the country. . . . [T]he State of
Pennsylvania has a contract which permits them to send accountants
into any supplier's office -- and they do. They send corps of
accountants into suppliers' offices to determine whether or not
they're getting the best price. And, in fact, if they were not,
they would have a violation of contract. . . ."
In the monopoly States, of course, no sales to retailers by
private wholesalers take place. Thus, brand owners dealing with
those States are not placed in the position of vouching for sales
to retailers by wholesalers occupying a "related person"
status.
[
Footnote 15]
Cf. State of Wisconsin v. Texaco, Inc., 14 Wis.2d 625,
630-631, 111 N.W.2d 918, 921;
Safeway Stores v. Oklahoma Retail
Grocers Assn., 360 U. S. 334,
360 U. S. 342,
n. 7.
[
Footnote 16]
Sections 101-b, subd. 3(a) and (b) of the ABC Law, as amended by
§ 7 of Chapter 531, provide:
". . . Such brand of liquor . . . shall not be sold to
wholesalers ['retailers' in § 101-b-3(b)] except at the price and
discounts then in effect unless prior written permission of the
authority is granted for good cause shown and for reasons not
inconsistent with the purpose of this chapter. . . ."
[
Footnote 17]
See State Board of Equalization v. Young's Market Co.,
299 U. S. 59;
Mahoney v. Joseph Triner Corp., 304 U.
S. 401;
Indianapolis Brewing Co. v. Liquor Control
Comm., 305 U. S. 391;
Joseph S. Finch & Co. v. McKittrick, 305 U.
S. 395;
Ziffrin, Inc. v. Reeves, 308 U.
S. 132;
California v. Washington, 358 U. S.
64.
[
Footnote 18]
The intent of the legislature in enacting § 9 is expressed in §
8 of Chapter 531:
". . . In order to forestall possible monopolistic and
anticompetitive practices designed to frustrate the elimination of
. . . discrimination and disadvantage [to consumers], it is hereby
further declared that the sale of liquor should be subjected to
certain further restrictions, prohibitions and regulations, and the
necessity for the enactment of the provisions of section nine of
this act is, therefore, declared as a matter of legislative
determination."
The preceding portion of § 8 states the intent of the
legislature in enacting § 11 of Chapter 531, which repealed §
101-c, the mandatory resale price maintenance provision.
See 384 U.S.
35app|>Appendix,
infra, p.
384 U. S.
54.
[
Footnote 19]
We also find without merit the appellants' objection that the
price computation provision, § 101-b, subd. 3(i), sweeps too
broadly. That provision was intended to circumvent the established
industry practice of interpreting "price" as "invoice price,"
rather than the amount actually realized by the seller on the
transaction. There is no indication in the record that § 101-b,
subd. 3(i) as applied will require the reflection in New York of
every idiosyncratic price fluctuation elsewhere in the United
States that happens to produce a "lowest price."
[
Footnote 20]
Section 101-b, subd. 4 of the ABC Law authorizes the State
Liquor Authority to promulgate rules to carry out the purpose of §
101-b.
[
Footnote 21]
The vice-president of Joseph E. Seagram & Sons, Inc., one of
the largest national distillers, testified that,
"[o]f the 330 wholesalers selling Seagram throughout the
country, sixteen do 75 percent or more of their business in the
sale of our brands. Sixty-one do approximately 60 to 75 percent in
the sale of these brands; seventy-three do 40 to 60 percent;
seventy-nine, 20 to 40 percent; sixty-four, 5 to 20 percent;
thirty-seven, 1 to 5 percent."
[
Footnote 22]
See Borregard & Glusker, The Distilled Spirits
Industry: A Marketing Survey 65-104, 133-163 (Yale Law School
1950); Oxenfeldt, "Whiskey Prices," Industrial Pricing and Market
Practices 445, 477, 483-486 (1951).
[
Footnote 23]
The New York fair trade statute is the Feld-Crawford Act, Laws
1940, c. 195, § 3, as amended, General Business Law, McKinney's
Consol.Laws, c. 20, §§ 369-a - 369-e.
See National Distillers
& Chemical Corp. v. Seyopp Corp., 17 N.Y.2d 12, 267
N.Y.S.2d 193, 214 N.E.2d 361;
National Distillers &
Chemical Corp. v. R. H. Macy & Co., 23 A.D.2d 51, 258
N.Y.S.2d 298;
Fleischmann Distilling Corp. v. R. H. Macy &
Co., 24 A.D.2d 977, 265 N.Y.S.2d 384;
Victor Fischel &
Co. v. R. H. Macy & Co., N.Y.Sup.Ct., 154 N.Y.L.J. No. 95,
p. 17 (Nov. 17, 1965).
[
Footnote 24]
Where the manufacturer is also the seller, this provision is
inapplicable.
See Alcoholic Beverage Control Law,
Appendix, Rule 16 of the State Liquor Authority, § 65.6(b)(3) (1965
Supp.), 9 NYCRR 65.6(b)(3).
|
384 U.S.
35app|
APPENDIX TO OPINION OF THE COURT.
Chapter 531, 1964 Session Laws of New York.
* * * *
§ 7. Section one hundred one-b of such law, as added by chapter
eight hundred ninety-nine of the laws of nineteen hundred
forty-two, subdivision four thereof having been amended by chapter
five hundred fifty-one of the laws of nineteen hundred forty-eight,
is hereby amended to read as follows:
§ 101-b.
Unlawful discriminations prohibited; filing of
schedules; schedule listing fund
* * * *
3. (a) No brand of liquor or wine shall be sold to or purchased
by a wholesaler, irrespective of the place of sale or delivery,
unless a schedule, as provided by this section, is filed with the
liquor authority, and is then in effect. Such schedule shall be in
writing duly verified, and filed in the number of copies and form
as required by the authority, and shall contain, with respect to
each item,
Page 384 U. S. 53
the exact brand or trade name, capacity of package, nature of
contents, age and proof where stated on the label, the number of
bottles contained in each case, the bottle and case price to
wholesalers, the net bottle and case price paid by the seller,
which prices, in each instance, shall be individual for each item
and not in "combination" with any other item, the discounts for
quantity, if any, and the discounts for time of payment, if any.
Such brand of liquor or wine shall not be sold to wholesalers
except at the price and discounts then in effect unless prior
written permission of the authority is granted for good cause shown
and for reasons not inconsistent with the purpose of this chapter.
Such schedule shall be filed by (1) the owner of such brand, or (2)
a wholesaler selling such brand and who is designated as agent for
the purpose of filing such schedule if the owner of the brand is
not licensed by the authority, or (3) with the approval of the
authority, by a wholesaler, in the event that the owner of the
brand is unable to file a schedule or designate an agent for such
purpose.
(b) No brand of liquor or wine shall be sold to or purchased by
a retailer unless a schedule, as provided by this section, is filed
with the liquor authority, and is then in effect. Such schedule
shall be in writing duly verified, and filed in the number of
copies and form as required by the authority, and shall contain,
with respect to each item, the exact brand or trade name, capacity
of package, nature of contents, age and proof where stated on the
label, the number of bottles contained in each case, the bottle and
case price to retailers, the net bottle and case price paid by the
seller, which prices, in each instance, shall be individual for
each item and not in "combination" with any other item, the
discounts for quantity, if any, and the discounts for time of
payment, if any. Such brand of liquor or wine shall not be sold to
retailers except at the price and discounts then in effect unless
prior
Page 384 U. S. 54
written permission of the authority is granted for good cause
shown and for reasons not inconsistent with the purpose of this
chapter. Such schedule shall be filed by each manufacturer selling
such brand to retailers and by each wholesaler selling such brand
to retailers.
(c) Provided however, nothing contained in this section shall
require any manufacturer or wholesaler to list in any schedule to
be filed pursuant to this section any item offered for sale to a
retailer under a brand which is owned exclusively by one retailer
and sold at retail within the state exclusively by such
retailer.
* * * *
§ 8. In enacting section eleven of this act, it is the firm
intention of the legislature (a) that fundamental principles of
price competition should prevail in the manufacture, sale and
distribution of liquor in this state, (b) that consumers of
alcoholic beverages in this state should not be discriminated
against or disadvantaged by paying unjustifiably higher prices for
brands of liquor than are paid by consumers in other states, and
that price discrimination and favoritism are contrary to the best
interests and welfare of the people of this state, and (c) that
enactment of section eleven of this act will provide a basis for
eliminating such discrimination against and disadvantage of
consumers in this state. In order to forestall possible
monopolistic and anticompetitive practices designed to frustrate
the elimination of such discrimination and disadvantage, it is
hereby further declared that the sale of liquor should be subjected
to certain further restrictions, prohibitions and regulations, and
the necessity for the enactment of the provisions of section nine
of this act is therefore declared as a matter of legislative
determination.
§ 9. Subdivision three of section one hundred one-b of such law,
as amended by section seven of this act, is
Page 384 U. S. 55
hereby amended to add eight new paragraphs, to be paragraphs
(d), (e), (f), (g), (h), (i), (j) and (k), to read as follows:
(d) There shall be filed in connection with and when filed shall
be deemed part of the schedule filed for a brand of liquor pursuant
to paragraph (a) of this subdivision an affirmation duly verified
by the owner of such brand of liquor, or by the wholesaler
designated as agent for the purpose of filing such schedule if the
owner of the brand of liquor is not licensed by the authority, that
the bottle and case price of liquor to wholesalers set forth in
such schedule is no higher than the lowest price at which such item
of liquor was sold by such brand owner or such wholesaler
designated as agent, or any related person, to any wholesaler
anywhere in any other state of the United States or in the District
of Columbia, or to any state (or state agency) which owns and
operates retail liquor stores, at any time during the calendar
month immediately preceding the month in which such schedule is
filed. As used in this paragraph (d), the term "related person"
shall mean any person (1) in the business of which such brand owner
or wholesaler designated as agent has an interest, direct or
indirect, by stock or other security ownership, as lender or
lienor, or by interlocking directors or officers, or (2) the
exclusive, principal or substantial business of which is the sale
of a brand or brands of liquor purchased from such brand owner or
wholesaler designated as agent, or (3) which has an exclusive
franchise or contract to sell such brand or brands.
(e) There shall be filed in connection with and when filed shall
be deemed part of any other schedule filed for a brand of liquor
pursuant to paragraph (a) of this subdivision an affirmation duly
verified by the person filing such schedule that the bottle and
case price of liquor to wholesalers set forth in such schedule is
no higher than
Page 384 U. S. 56
the lowest price at which such item of liquor was sold by such
person to any wholesaler anywhere in any other state of the United
States or in the District of Columbia, or to any state (or state
agency) which owns and operates retail liquor stores, at any time
during the calendar month immediately preceding the month in which
such schedule is filed.
(f) There shall be filed in connection with and when filed shall
be deemed part of any schedule filed for a brand of liquor pursuant
to paragraph (b) of this subdivision by the owner of such brand of
liquor, or by the wholesaler designated as agent for the purpose of
filing such schedule if the owner of the brand of liquor is not
licensed by the authority, or by a related person, an affirmation
duly verified by such brand owner or such wholesaler designated as
agent that the bottle and case price of liquor to retailers set
forth in such schedule is no higher than the lowest price at which
such item of liquor was sold by such brand owner of [
sic]
such wholesaler designated as agent, or any related person, to any
retailer anywhere in any other state of the United States or in the
District of Columbia, other than to any state (or state agency)
which owns and operates retail liquor stores, at any time during
the calendar month immediately preceding the month in which such
schedule is filed. As used in this paragraph (f), the term "related
person" shall mean any person (1) in the business of which such
brand owner or wholesaler designated as agent has an interest,
direct or indirect, by stock or other security ownership, as lender
or lienor, or by interlocking directors or officers, or (2) the
exclusive, principal or substantial business of which is the sale
of a brand or brands of liquor purchased from such brand owner or
wholesaler designated as agent, or (3) who has an exclusive
franchise or contract to sell such brand or brands.
Page 384 U. S. 57
(g) There shall be filed in connection with and when filed shall
be deemed part of any other schedule filed for a brand of liquor
pursuant to paragraph (b) of this subdivision an affirmation duly
verified by the person filing such schedule that the bottle and
case price of liquor to retailers set forth in such schedule is no
higher than the lowest price at which such item of liquor was sold
by such person to any retailer anywhere in any other state of the
United States or in the District of Columbia, other than to any
state (or state agency) which owns and operates retail liquor
stores, at any time during the calendar month preceding the month
in which such schedule is filed.
(h) In the event an affirmation with respect to any item of
liquor is not filed within the time provided by this section, any
schedule for which such affirmation is required shall be deemed
invalid with respect to such item of liquor, and no such item may
be sold to or purchased by any wholesaler or retailer during the
period covered by any such schedule.
(i) In determining the lowest price for which any item of liquor
was sold in any other state or in the District of Columbia, or to
any state (or state agency) which owns and operates retail liquor
stores, appropriate reductions shall be made to reflect all
discounts in excess of those to be in effect under such schedule,
and all rebates, free goods, allowances and other inducements of
any kind whatsoever offered or given to any such wholesaler, state
(or state agency) or retailer, as the case may be, purchasing such
item in such other state or in the District of Columbia; provided
that nothing contained in paragraphs (d), (e), (f) and (g) of this
subdivision shall prevent differentials in price which make only
due allowance for differences in state taxes and fees, and in the
actual cost of delivery. As used in this paragraph, the term "state
taxes or fees" shall mean the excise taxes
Page 384 U. S. 58
imposed or the fees required by any state or the District of
Columbia upon or based upon the gallon of liquor, and the term
"gallon" shall mean one hundred twenty-eight fluid ounces.
(j) Notwithstanding and in lieu of any other penalty provided in
any other provisions of this chapter, any person who makes a false
statement in any affirmation made and filed pursuant to paragraph
(d), (e), (f) or (g) of this subdivision shall be guilty of a
misdemeanor, and upon conviction thereof shall be punishable by a
fine of not more than ten thousand dollars or by imprisonment in a
county jail or penitentiary for a term of not more than six months
or by both such fine and imprisonment. Every affirmation made and
filed pursuant to paragraph (d), (e), (f) or (g) of this
subdivision shall be deemed to have been made in every county in
this state in which the brand of liquor is offered for sale under
the terms of said schedule. The attorney general or any district
attorney may prosecute any person charged with the commission of a
violation of this paragraph. In any such prosecution by the
attorney general, he may appear in person or by his deputy or
assistant before any court or any grand jury and exercise all the
powers and perform all the duties in respect of any such proceeding
which the district attorney would otherwise be authorized or
required to exercise or perform, and in such prosecution the
district attorney shall only exercise such powers and perform such
duties as are required of him by the attorney general or his deputy
or assistant so attending.
(k) Upon final judgment of conviction of any person after
appeal, or in the event no appeal is taken, upon the expiration of
the time during which an appeal could have been taken, the liquor
authority may refuse to accept for any period of months not
exceeding three calendar months any affirmation required to be
filed by such person.