384 U.S. 35 (1966), Seagram & Sons v. Hostetter

Citation:384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336
Party Name:Seagram & Sons v. Hostetter
Case Date:April 19, 1966
Court:United States Supreme Court

Page 35

384 U.S. 35 (1966)

86 S.Ct. 1254, 16 L.Ed.2d 336

Seagram & Sons

v.

Hostetter

United States Supreme Court

April 19, 1966

APPEAL FROM THE COURT OF APPEALS OF NEW YORK

Syllabus

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. 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. 42.

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(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. 43.

(c) The effects of § 9 on appellants' business outside New York are largely conjectural. P. 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. 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. 46-48.

4. The statutory definition of "related person" does not violate due process requirements by being unconstitutionally vague. Pp. 48-50.

(a) Where the determination of "related person" status is unclear, the Liquor Authority can be asked for clarification. P. 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. 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. 50-51.

6. Provisions in § 7, also challenged by appellants, which require that price schedules be filed to cover sales to wholesalers "irrespective

Page 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. 51-52.

16 N.Y.2d 47, 109 N.E.2d 701, affirmed.

STEWART, J., lead opinion

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.1 The trial court upheld the constitutionality of the law,2 and its

Page 38

judgment was affirmed by the Appellate Division3 and by the New York Court of Appeals.4 The appellants brought the case here,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.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.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

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Commission sponsored various study papers and issued a series of reports and recommendations.8 It found unequivocally [86 S.Ct. 1258] 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.9 The Commission therefore recommended the repeal of that provision,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.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 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.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 41

wholesaler may sell a particular brand of liquor to a New York retailer, he must secure an...

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  • 11 F.Supp.2d 795 (E.D.Va. 1998), Civ.A. 398CV309, Richmond Medical Center for Women v. Gilmore
    • United States
    • Federal Cases United States District Courts 4th Circuit Eastern District of Virginia
    • June 25, 1998
    ...Indus., Inc. v. Teamsters Joint Council, 718 F.2d 628, 643 (4th Cir. 1983) (citing Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 48-49, 86 S.Ct. 1254, 16 L.Ed.2d 336 (1966)), cert. denied, 467 U.S. 1259, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984). Neither Republic Industries nor ......
  • 377 F.Supp. 673 (D.Neb. 1974), Civ. 73-L-286, Orr v. Koefoot
    • United States
    • Federal Cases United States District Courts 8th Circuit District of Nebraska
    • June 12, 1974
    ...23rd resolution was clearly intended to impose the same limitation as the contract. [16] In the case of Seagram & Sons v. Hostetter, 384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336, rehearing denied, 384 U.S. 967, 86 S.Ct. 1583, 16 L.Ed.2d 679 (1966), the Court 'A statute is not invalid unde......
  • 426 F.Supp. 543 (D.Conn. 1977), Civ. H-76-4, Inturri v. Healy
    • United States
    • Federal Cases United States District Courts 2nd Circuit District of Connecticut
    • February 16, 1977
    ...their face, and have found them to be valid. The admonition contained in the Court's opinion in Joseph E. Seagram & Sons v. Hostetter, 384 U.S. 35, 52, 86 S.Ct. 1254, 1264, 16 L.Ed.2d 336 (1966), is equally in point here: 'Although it is possible that specific future applications of (th......
  • 22 Cal.3d 388, 23641, Hale v. Morgan
    • United States
    • California Supreme Court of California
    • September 28, 1978
    ...invalidate a statute. (Nebbia v. New York (1934) 291 U.S. 502, 525, 54 S.Ct. 505, 78 L.Ed. 940; Seagram & Sons v. Hostetter (1966) 384 U.S. 35, 47, 86 S.Ct. 1254, 16 L.Ed.2d 336; Galvan v. Superior Court (1969) 70 Cal.2d 851, 869, 76 Cal.Rptr. 642; Wilke & Holzheiser, Inc. v. Dept. ......
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272 cases
  • 11 F.Supp.2d 795 (E.D.Va. 1998), Civ.A. 398CV309, Richmond Medical Center for Women v. Gilmore
    • United States
    • Federal Cases United States District Courts 4th Circuit Eastern District of Virginia
    • June 25, 1998
    ...Indus., Inc. v. Teamsters Joint Council, 718 F.2d 628, 643 (4th Cir. 1983) (citing Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 48-49, 86 S.Ct. 1254, 16 L.Ed.2d 336 (1966)), cert. denied, 467 U.S. 1259, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984). Neither Republic Industries nor ......
  • 377 F.Supp. 673 (D.Neb. 1974), Civ. 73-L-286, Orr v. Koefoot
    • United States
    • Federal Cases United States District Courts 8th Circuit District of Nebraska
    • June 12, 1974
    ...23rd resolution was clearly intended to impose the same limitation as the contract. [16] In the case of Seagram & Sons v. Hostetter, 384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336, rehearing denied, 384 U.S. 967, 86 S.Ct. 1583, 16 L.Ed.2d 679 (1966), the Court 'A statute is not invalid unde......
  • 426 F.Supp. 543 (D.Conn. 1977), Civ. H-76-4, Inturri v. Healy
    • United States
    • Federal Cases United States District Courts 2nd Circuit District of Connecticut
    • February 16, 1977
    ...their face, and have found them to be valid. The admonition contained in the Court's opinion in Joseph E. Seagram & Sons v. Hostetter, 384 U.S. 35, 52, 86 S.Ct. 1254, 1264, 16 L.Ed.2d 336 (1966), is equally in point here: 'Although it is possible that specific future applications of (th......
  • 22 Cal.3d 388, 23641, Hale v. Morgan
    • United States
    • California Supreme Court of California
    • September 28, 1978
    ...invalidate a statute. (Nebbia v. New York (1934) 291 U.S. 502, 525, 54 S.Ct. 505, 78 L.Ed. 940; Seagram & Sons v. Hostetter (1966) 384 U.S. 35, 47, 86 S.Ct. 1254, 16 L.Ed.2d 336; Galvan v. Superior Court (1969) 70 Cal.2d 851, 869, 76 Cal.Rptr. 642; Wilke & Holzheiser, Inc. v. Dept. ......
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1 firm's commentaries
2 books & journal articles
  • Antitrust and the supremacy clause.
    • United States
    • Stanford Law Review Vol. 59 Nbr. 1, October 2006
    • October 1, 2006
    ...(35.) Id. (36.) Id. at 98. (37.) 458 U.S. 654, 656-57 (1982). (38.) Id. at 661; accord Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 45 (1966) (rejecting an antitrust preemption challenge to a state regime, which forbade liquor brand owners from charging prices within the st......
  • A beautiful mend: a game theoretical analysis of the dormant Commerce Clause doctrine.
    • United States
    • William and Mary Law Review Vol. 45 Nbr. 1, October 2003
    • October 1, 2003
    ...States Brewers Ass'n v. Healy, 692 F.2d 275 (2d Cir. 1982), aff'd mem., 464 U.S. 909 (1983) (Healy I). (366.) 476 U.S. 573 (1986). (367.) 384 U.S. 35 (1966). (368.) See id. at 42. (369.) 457 U.S. 624 (1982). (370.) 481 U.S. 69 (1987). (371.) 457 U.S. at 641. (372.) Healy v. Beer Institute, ......