American Can Co. v. Oregon Liquor Control Commission

• Decision Date: 20 February 1974
• Citation: 15 Or.App. 618,517 P.2d 691
• Parties: , 6 ERC 1350, 4 Envtl. L. Rep. 20,218 AMERICAN CAN COMPANY, a New Jersey corporation et al., Appellants, v. OREGON LIQUOR CONTROL COMMISSION et al., Respondents. Northwestern Glass Company, a division of Indian Head, Inc., a Delaware corporation et al., Intervenors-Appellants.
• Court: Oregon Court of Appeals

Page 691

517 P.2d 691

15 Or.App. 618, 6 ERC 1350, 4 Envtl.

L. Rep. 20,218

AMERICAN CAN COMPANY, a New Jersey corporation et al., Appellants, v. OREGON LIQUOR CONTROL COMMISSION et al., Respondents Northwestern Glass Company, a division of Indian Head, Inc. a Delaware corporation et al., Intervenors-Appellants.

Court of Appeals of Oregon.

Argued and Submitted Oct. 29, 1973.

Decided Dec. 17, 1973.

Rehearing Denied Jan. 23, 1974.

Review Denied Feb. 20, 1974.

George L. Wagner, Portland, argued the cause for appellants. With him on the briefs were Dezendorf, Spears, Lubersky & Campbell, Portland, and Chadwell, Kayser, Ruggles, McGee, Hastings & McKinney, and C. Lee Cook, Jr., Chicago, Ill

Philip B. Kurland, Chicago, Ill., argued the cause for intervenors-appellants. With him on the briefs were Miller, Anderson, Nash, Yerke & Wiener, and Fredric A. Yerke, Jr., Portland, Fuller, Henry, Hodge & Snyder, Fred E. Fuller and William W. Sadd, Toledo, Ohio, Alexander M. Bickel, New Haven, Conn., and Gerald Gunther, Stanford, Cal.

Lee Johnson, Atty. Gen., Salem, argued the cause for respondents. With him on the brief were John W. Osburn, Sol. Gen., and John B. Leahy, Asst. Atty. Gen., Salem.

John E. Bryson, Palo Alto, Cal., Thomas C. Grey, Portola Valley, Cal., and William N. Gross and Anderson, Hall, Lowthian & Gross, Portland, filed a brief for Natural Resources Defense Council, Inc., and People's Lobby Against Non-Returnables as amici curiae.

Hans A. Linde, Eugene, filed a brief for Oregon Environmental Council as amicus curiae.

Before SCHWAB, C.J., and FORT and TANZER, JJ.

TANZER, Judge.

This is an appeal from a circuit court decree declaring that Oregon's so-called bottle bill, ORS 459.810--459.890, is valid and denying plaintiffs' and intervenors' application for injunctive relief against the enforcement of the law. Plaintiffs are (a) manufacturers of cans who supply the beer and soft drink industries, (b) brewers who brew and package beer in California and Arizona which is shipped to and sold in Oregon, (c) out-of-state soft drink canners who can soft drinks for Oregon bottlers for resale here, (d) soft drink companies who market their products in Oregon, and (e) the Oregon Soft Drink Association. Intervenors are five glass container manufacturers who supply the beer and soft drink industries. (The term 'plaintiffs' will be used in this opinion to include intervenors unless it is specified otherwise.) The defendants include (as parties responsible for administering the statute) the Oregon Liquor Control Commission, its commissioners and administrator, the State Department of Agriculture and its director, and the State of Oregon.

The bottle bill, enacted by the Oregon legislature in 1971, became effective on October 1, 1972. The statute's principal provisions are as follows:

1. Every retailer of the covered beverages (beer or carbonated beverages) in Oregon is required to 'accept from a consumer any empty beverage containers of the kind, common size and brand sold by the dealer' and to pay the consumer the statutory 'refund value' of the container. ORS 459.830(1). The 'refund value' is required to be indicated on every beverage container 'sold or offered for sale in this state by the dealer.' ORS 459.850.

2. A distributor must similarly accept empty containers from a dealer for the 'refund value.' ORS 459.830(2). A distributor is defined as a person, including a manufacturer, 'who engages in the sale of beverages in beverage containers to a dealer in this state.' ORS 459.810(6).

3. Metal beverage containers, a part of which is wholly detachable in opening without a can opener ('pull top' cans), may not be sold at retail in Oregon. ORS 459.850(3).

4. A reduced 'refund value' may be administratively set for a beverage container which is acceptable to more than one manufacturer for re-use in the ordinary course of business. ORS 459.860. This reduced 'refund value' has been set in the amount of two cents for such 'certified' containers. ORS 459.820(2).

The primary legislative purpose of the bottle bill is to cause bottlers of carbonated soft drinks and brewers to package their products for distribution in Oregon in returnable, multiple-use deposit bottles toward the goals of reducing litter and solid waste in Oregon and reducing the injuries to people and animals due to discarded 'pull tops.'

As bases for attacking the validity of the statute, plaintiffs invoke the Equal Protection ¹ and Due Process ² Clauses of the Fourteenth Amendment to the United States Constitution, and the Commerce Clause, art. 1, § 8, clause 3, of the United States Constitution. ³ In addition, plaintiffs cite various provisions of the Oregon Constitution. ⁴

One of plaintiffs' main objectives at trial was to show that the bottle bill would have an effect not only upon manufacturers of bottles and cans, but also upon an entire distribution chain including brewers, soft drink bottlers and canners, beer wholesalers, retailers and, ultimately, consumers. The evidence in this regard demonstrated that the consumption of malt beverages and soft drinks had increased greatly in the United States in recent years, and that a large part of this increase could be attributed to the use of convenient 'one-way' packages, including both cans and non-returnable bottles. Plaintiffs assert that non-returnable containers are essential to the existence of national and regional beer markets, and that non-returnable containers are also essential to the continued existence of soft drink enterprises. The non-returnable containers were shown to have provided economies in the packaging and distribution of soft drinks and beer by eliminating the cost of shipping the containers both ways, thus causing an increase in feasible shipping distances and enlarging the market each manufacturer could cover. Among the effects of the bottle bill, plaintiffs' witnesses predicted, would be a substantial reduction in Oregon sales of soft drinks packaged outside Oregon, and impairment of the ability of distant brewers to compete in the Oregon market. The bottle bill would necessitate substantial changes in the structure of the industries involved in the manufacturing and merchandising of beer and soft drinks.

Substantial portions of plaintiffs' evidence was directed to the extent of the bottle bill's economic impact upon the specific individual industries represented by the plaintiffs. Summarized, this evidence (which was uncontradicted) predicted the following impact upon the various industries:

1. Spokesmen of the three plaintiff soft drink canners testified that each of their companies would be hurt by the bottle bill because the statute would substantially eliminate soft drink cans from the Oregon market. One witness, the president of an Oregon canning company, predicted that the statute would put his company out of business. Representatives of the two out-of-state companies, while not predicting complete ruin, predicted that they would suffer substantial economic loss.

2. Representatives of the plaintiff metal container companies testified that beer and soft drink containers represented a substantial percentage of their total metal container production (in the case of one firm, the percentage was 100 percent), and that the Oregon market was a significant outlet for their products. Some of the companies would be forced to eliminate portions of their operations because of the statute, it was predicted, and each of the representatives stated the opinion that nationwide enactment of laws similar to the bottle bill would severely damage his business. In addition, the can companies' spokesmen testified that the bottle bill's ban on pull tops would hurt that aspect of their businesses too.

3. It was predicted that, because of the changes in the structure of the industries which would be mandated by the bottle bill, the Oregon sales of the plaintiff brewers would be reduced and that the price of beer would have to rise when the statute went into effect. Similarly, because of the changes which would be necessary in the soft drink industry, it was predicted that the size and growth of the Oregon soft drink market would be substantially reduced.

4. Representatives of intervenor glass companies (which are capable of manufacturing both returnable and non-returnable bottles) testified that they will lose a substantial volume of sales because the bottle bill encourages multiple Finally, evidence was introduced by plaintiffs which was designed to (a) minimize the predicted effectiveness of the bottle bill toward the statute's purposes of elimination of litter and reduction of glass and metal refuse in the solid waste stream; (b) contend that a merchandising system utilizing solely returnable containers is unworkable, and that consumers would not support it; and (c) point out alternative means of attacking these problems. In this regard, plaintiffs presented evidence that the containers regulated by the bottle bill constitute a relatively small percentage of litter and solid waste, and expert testimony from a behavioral scientist who testified that the provision of refund values on beverage containers will not substantially modify littering behavior. In addition, plaintiffs presented evidence of the activities of various civic organizations designed to alleviate the litter and solid waste problems, and the establishment in various places around the nation of resource recovery systems. It was contended that these were viable alternatives to the solution inherent in the bottle bill.

use of each bottle. Each time a bottle is refilled, plaintiffs will [15 Or.App. 627] have lost a potential sale of a new bottle. The evidence indicated that the extent of loss due to the Oregon statute would be significant, and if such statutes should be passed in other states, the effect would be multiplied.

COMMERCE CLAUSE

Plaintiffs' most substantial challenge to the bottle bill is under the...