West Lynn Creamery, Inc. v. Healy
512 U.S. 186 (1994)

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OCTOBER TERM, 1993

Syllabus

WEST LYNN CREAMERY, INC., ET AL. v. HEALY, COMMISSIONER OF MASSACHUSETTS DEPARTMENT OF FOOD AND AGRICULTURE

CERTIORARI TO THE SUPREME JUDICIAL COURT OF MASSACHUSETTS

No. 93-141. Argued March 2, 1994-Decided June 17, 1994

A Massachusetts pricing order subjects all fluid milk sold by dealers to Massachusetts retailers to an assessment. Although most of that milk is produced out of State, the entire assessment is distributed to Massachusetts dairy farmers. Petitioners-licensed dealers who purchase milk produced by out-of-state farmers and sell it within Massachusetts-sued to enjoin enforcement of the order on the ground that it violated the Federal Commerce Clause, but the state court denied relief. The Supreme Judicial Court of Massachusetts affirmed, concluding that the order was not facially discriminatory, applied evenhandedly, and only incidentally burdened interstate commerce, and that such burden was outweighed by the "local benefits" to the dairy industry.

Held: The pricing order unconstitutionally discriminates against interstate commerce. Pp. 192-207.

(a) The order is clearly unconstitutional under this Court's decisions invalidating state laws designed to benefit local producers of goods by creating tariff-like barriers that neutralized the competitive and economic advantages possessed by lower cost out-of-state producers. See, e. g., Bacchus Imports, Ltd. v. Dias, 468 U. S. 263. The "premium payments" are effectively a tax making milk produced out of State more expensive. Although that tax also applies to milk produced in Massachusetts, its effect on Massachusetts producers is entirely (indeed more than) offset by the subsidy provided exclusively to Massachusetts dairy farmers, who are thereby empowered to sell at or below the price charged by lower cost out-of-state producers. Pp. 192-197.

(b) Respondent's principal argument-that, because both the localsubsidy and nondiscriminatory-tax components of the order are valid, the combination of the two is equally valid-is rejected. Even granting respondent's assertion that both components of the pricing order would be constitutional standing alone, the order must still fall because it is funded principally from taxes on the sale of milk produced in other States and therefore burdens interstate commerce. More fundamentally, the argument is logically flawed in its assumption that the lawfulness of each of two acts establishes the legality of their combination.


187

Indeed, by conjoining a tax and a subsidy, Massachusetts has created a program more dangerous to interstate commerce than either part alone:

The Commonwealth's political processes cannot be relied on to prevent legislative abuse where dairy farmers, one of the powerful in-state interests that would ordinarily be expected to lobby against the order premium as a tax raising milk prices, have been mollified by the subsidy. pp. 198-202.

(c) Respondent's second argument-that the order is not discriminatory because the dealers who pay premiums are not competitors of the farmers who receive disbursements-cannot withstand scrutiny. The imposition of a differential burden on any part of the stream of commerce-from wholesaler to retailer to consumer-is invalid because a burden placed at any point will result in a disadvantage to the out-ofstate producer. pp. 202-203.

(d) If accepted, respondent's third argument-that the order is not protectionist because the program's costs are borne only by Massachusetts dealers and consumers and its benefits are distributed exclusively to Massachusetts farmers-would undermine almost every discriminatory tax case. State taxes are ordinarily paid by in-state businesses and consumers, yet if they discriminate against out-of-state products they are unconstitutional. More fundamentally, the argument ignores the fact that Massachusetts dairy farmers are part of an integrated interstate market. The obvious impact of the order on out-of-state production demonstrates that it is simply wrong to assume that it burdens only in-state consumers and dealers. Pp. 203-204.

(e) Acceptance of respondent's final argument-that the order's incidental burden on commerce is justified by the local benefit of saving the financially distressed dairy industry-would make a virtue of the vice that the rule against discrimination condemns. Preservation of local industry by protecting it from the rigors of interstate competition is the hallmark of the economic protectionism that the Commerce Clause prohibits. Pp. 204-207.

415 Mass. 8, 611 N. E. 2d 239, reversed.

STEVENS, J., delivered the opinion of the Court, in which O'CONNOR, KENNEDY, SOUTER, and GINSBURG, JJ., joined. SCALIA, J., filed an opinion concurring in the judgment, in which THOMAS, J., joined, post, p. 207. REHNQUIST, C. J., filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 212.

Steven J. Rosenbaum argued the cause for petitioners.

With him on the briefs were Michael L. Altman and Robert A. Long, Jr.


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Full Text of Opinion

Primary Holding
The Commerce Clause does not allow a state to tax all distributions of a good while distributing its assets only to local producers.
Facts
In order to protect local dairy producers, Massachusetts imposed a levy on all dairy products that were sold in Massachusetts. The state then redistributed the proceeds of the levy only among producers in the state. West Lynn Creamery, a milk dealer that purchased milk from producers outside the state, argued that the assessment system violated the Commerce Clause.

Opinions

Majority

  • John Paul Stevens (Author)
  • Sandra Day O'Connor
  • Anthony M. Kennedy
  • David H. Souter
  • Ruth Bader Ginsburg

This assessment system operates as a virtual tariff on out-of-state goods, even though it is an indirect way of achieving that effect. These tariffs are categorically forbidden under the Commerce Clause. Either a subsidy for local producers or a non-discriminatory tax against producers from both inside and outside the state would be independently valid. Together, they become an unconstitutional tariff that interferes with interstate commerce.

Concurrence

  • Antonin Scalia (Author)
  • Clarence Thomas

Dissent

  • William Hubbs Rehnquist (Author)
  • Harry Andrew Blackmun

Case Commentary

A key element of the dormant Commerce Clause doctrine is that a state cannot expressly burden non-residents to benefit residents. Even though the tax was not discriminatory on its face, the discriminatory purpose is clear because its benefits were assigned to the residents burdened by it, which essentially canceled out the burdens. Protectionism of local industry against national competition has a negative effect on the national economy and should not be permitted.

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