California Retail Liquor Dealers Association v. Midcal Aluminum, Inc, 79-97
Court | United States Supreme Court |
Citation | 100 S.Ct. 937,445 U.S. 97,63 L.Ed.2d 233 |
Docket Number | No. 79-97,79-97 |
Parties | CALIFORNIA RETAIL LIQUOR DEALERS ASSOCIATION, Petitioner, v. MIDCAL ALUMINUM, INC., et al |
Decision Date | 03 March 1980 |
A California statute requires all wine producers and wholesalers to file fair trade contracts or price schedules with the State. If a producer has not set prices through a fair trade contract, wholesalers must post a resale price schedule and are prohibited from selling wine to a retailer at other than the price set in a price schedule or fair trade contract. A wholesaler selling below the established prices faces fines or license suspension or revocation. After being charged with selling wine for less than the prices set by price schedules and also for selling wines for which no fair trade contract or schedule had been filed, respondent wholesaler filed suit in the California Court of Appeal asking for an injunction against the State's wine-pricing scheme. The Court of Appeal ruled that the scheme restrains trade in violation of the Sherman Act, and granted injunctive relief, rejecting claims that the scheme was immune from liability under that Act under the doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, and was also protected by § 2 of the Twenty-first Amendment, which prohibits the transportation or importation of intoxicating liquors into any State for delivery or use therein in violation of the State's laws.
Held:
1. California's wine-pricing system constitutes resale price maintenance in violation of the Sherman Act, since the wine producer holds the power to prevent price competition by dictating the prices charged by wholesalers. And the State's involvement in the system is insufficient to establish antitrust immunity under Parker v. Brown, supra. While the system satisfies the first requirement for such immunity that the challenged restraint be "one clearly articulated and affirmatively expressed as state policy," it does not meet the other requirement that the policy be "actively supervised" by the State itself. Under the system the State simply authorizes price setting and enforces the prices established by private parties, and it does not establish prices, review the reasonableness of price schedules, regulate the terms of fair trade contracts, monitor market conditions, or engage in any "pointed reexamination" of the program. The national policy in favor of competition cannot be thwarted by casting such a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement. Pp. 102-106.
2. The Twenty-first Amendment does not bar application of the Sherman Act to California's wine-pricing system. Pp. 106-114.
(a) Although under that Amendment States retain substantial discretion to establish liquor regulations over and above those governing the importation or sale of liquor and the structure of the liquor distribution system, those controls may be subject to the federal commerce power in appropriate situations. Pp. 106-110.
(b) There is no basis for disagreeing with the view of the California courts that the asserted state interests behind the resale price maintenance system of promoting temperance and protecting small retailers are less substantial than the national policy in favor of competition. Such view is reasonable and is supported by the evidence, there being nothing to indicate that the wine-pricing system helps sustain small retailers or inhibits the consumption of alcohol by Californians. Pp. 110-114.
90 Cal.App.3d 979, 153 Cal.Rptr. 757, affirmed.
William T. Chidlaw, Sacramento, Cal., for petitioner.
Jack B. Owens, San Francisco, Cal., for respondents.
George J. Roth, Sacramento, Cal., for the State of California, as amicus curiae, by special leave of Court.
In a state-court action, respondent Midcal Aluminum, Inc., a wine distributor, presented a successful antitrust challenge to California's resale price maintenance and price posting statutes for the wholesale wine trade. The issue in this case is whether those state laws are shielded from the Sherman Act by either the doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), or § 2 of the Twenty-first Amendment.
Under § 24866(b) of the California Business and Professions Code, all wine producers, wholesalers, and rectifiers must file fair trade contracts or price schedules with the State.1 If a wine producer has not set prices through a fair trade contract, wholesalers must post a resale price schedule for that producer's brands. § 24866(a). No state-licensed wine merchant may sell wine to a retailer at other than the price set "either in an effective price schedule or in an effective fair trade contract . . . ." § 24862 (West Supp.1980).
The State is divided into three trading areas for administration of the wine pricing program. A single fair trade contract or schedule for each brand sets the terms for all wholesale transactions in that brand within a given trading area. §§ 24862, 24864, 24865 (West Supp.1980). Similarly, state regulations provide that the wine prices posted by a single wholesaler within a trading area bind all wholesalers in that area. Midcal Aluminum, Inc. v. Rice, 90 Cal.App.3d 979, 983-984, 153 Cal.Rptr. 757, 760 (1979). A licensee selling below the established prices faces fines, license suspension, or outright license revocation. Cal.Bus. & Prof.Code Ann. § 24880 (West Supp.1980).2 The State has no direct control over wine prices, and it does not review the reasonableness of the prices set by wine dealers.
Midcal Aluminum, Inc., is a wholesale distributor of wine in southern California. In July 1978, the Department of Alcoholic Beverage Control charged Midcal with selling 27 cases of wine for less than the prices set by the effective price schedule of the E. & J. Gallo Winery. The Department also alleged that Midcal sold wines for which no fair trade contract or schedule had been filed. Midcal stipulated that the allegations were true and that the State could fine it or suspend its license for those transgressions. App. 19-20. Midcal then filed a writ of mandate in the California Court of Appeal for the Third Appellate District asking for an injunction against the State's wine pricing system.
The Court of Appeal ruled that the wine pricing scheme restrains trade in violation of the Sherman Act, 15 U.S.C. § 1 et seq. The court relied entirely on the reasoning in Rice v. Alcoholic Beverage Control Appeals Bd., 21 Cal.3d 431, 146 Cal.Rptr. 585, 579 P.2d 476 (1978), where the California Supreme Court struck down parallel restrictions on the sale of distilled liquors. In that case, the court held that because the State played only a passive part in liquor pricing, there was no Parker v. Brown immunity for the program.
21 Cal.3d, at 445, 146 Cal.Rptr., at 595, 579 P.2d, at 486.
Rice also rejected the claim that California's liquor pricing policies were protected by § 2 of the Twenty-first Amendment, which insulates state regulation of intoxicating liquors from many federal restrictions. The court determined that the national policy in favor of competition should prevail over the state interests in liquor price maintenance—the promotion of temperance and the preservation of small retail establishments. The court emphasized that the California system not only permitted vertical control of prices by producers, but also frequently resulted in horizontal price fixing. Under the program, many comparable brands of liquor were marketed at identical prices.3 Referring to congressional and state legislative studies, the court observed that resale price maintenance has little positive impact on either temperance or small retail stores. See infra, at 112-113.
In the instant case, the State Court of Appeal found the analysis in Rice squarely controlling. 90 Cal.App.3d, at 984, 153 Cal.Rptr., at 760. The court ordered the Department of Alcoholic Beverage Control not to enforce the resale price maintenance and price posting statutes for the wine trade. The Department, which in Rice had not sought certiorari from this Court, did not appeal the ruling in this case.4 An appeal was brought by the California Retail Liquor Dealers Association, an intervenor.5 The California Supreme Court declined to hear the case, and the Dealers Association sought certiorari from this Court. We granted the writ, 444 U.S. 824, 100 S.Ct. 45, 62 L.Ed.2d 31 (1979), and now affirm the decision of the state court.
The threshold question is whether California's plan for wine pricing violates the Sherman Act. This Court has ruled consistently that resale price maintenance illegally restrains trade. In Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 407, 31 S.Ct. 376, 384, 55 L.Ed. 502 (1911), the Court observed that such arrangements are "designed to maintain prices . . ., and to prevent competition among those who trade in [competing goods]." See Albrecht v. Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998 (1968); United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); United States v. A. Schrader's Son, Inc., 252 U.S. 85, 40 S.Ct. 251, 64 L.Ed. 471 (1920). For many years, however, the Miller-Tydings Act of 1937 permitted the States to authorize resale price maintenance. 50 Stat. 693. The goal of that statute was to allow the States...
To continue reading
Request your trial-
Mcguire v. Ameritech Services Inc., No. C-3-99-661.
...state policy, and where said policy is actively supervised by the state itself. See California Retail Liquor Dealers Assoc. v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980). Where an actively supervised state policy is identified, the immunity extends not onl......
-
Bally Mfg. Corp. v. New Jersey Casino Control Commission
...(1978). The United States Supreme Court most recently reviewed the Parker v. Brown doctrine in California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980). Considering the development of that doctrine in the subsequent decisions regarding antitrust immuni......
-
Suburban Trails, Inc. v. New Jersey Transit Corp., Civ. A. No. 85-1398.
...States, ___ U.S. ___, ___, 105 S.Ct. 1721, 1727, 85 L.Ed.2d 36 (1985), (quoting California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980) and City of Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 410, 98 S.Ct. 11......
-
McNeil v. McDonough, Civ. No. 76-1024.
...recently upheld by the Supreme Court of New Jersey, and supported by the decision in California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980). This change inevitably foreshadows a shrinkage in the authorized positions for ABC, ......
-
Supreme Court Docket Report - June 26, 2012
...and the private conduct is "'actively supervised' by the State itself." California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980). "[T]he State may not validate . . . anticompetitive conduct," however, "simply by declaring it to be lawful." Hallie, 471 U.S. at......
-
U.S. Supreme Court To Dive Deeply Into Antitrust: Granting Certiorari In Two Antitrust Cases
...of Eau Claire, 471 U.S. 34, 38-39 (1985) (internal citations omitted). 14 California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980). 15 Petition for Writ of Certiorari, Federal Trade Commission v. Phoebe Putney Health System, No. 11-1160 (U.S. March 23, 2012),......
-
Supreme Court Finds That Regulatory Boards Composed Of 'Active Market Participants' Are Subject To Antitrust Laws If Not Actively Supervised By The State
...its progeny. The Court noted that under its previous decisions, including California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), a "nonsovereign actor controlled by active market participants" was entitled to immunity only if (i) the restriction at issue was "c......
-
Proposed Rule Attempts To Ban Non-Compete Clauses As Method Of 'Unfair Competition' Under Section 5 Of FTC Act
...own borders under certain conditions. See Parker v. Brown, 317 U.S. 341 (1943); Cal. Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 4 Alternative #2 would resemble recent non-compete statutes passed by Rhode Island, Massachusetts and Washington state, though those states ......
-
Adjudication
...by U.S. Court of Appeals, Dkt. No. 9343 (Feb. 10, 2012), available at http://www.ftc.gov/os/adjpro/d9343/1202101ncdentalorder. pdf. 300. 445 U.S. 97 (1980). 301. North Carolina Bd. of Dental Exam’rs , at 2. 302. Order Denying Respondent’s Motion for Partial Stay of Final Order Pending Appea......
-
Overview of Exemptions and Defenses
...Carriers Rate Conference v. United States, 471 U.S. 48, 61-62 (1985). 230 . Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum Inc . , 445 U.S. 97, 105 (1980) (citations omitted). 231 . Southern Motor Carriers , 471 U.S. at 60. 232 . Lafayette v. La. Power & Light Co . , 435 U.S. 389, 415 ......
-
Pleadings and Procedural Issues
...that state action immunity is disfavored. See Phoebe Putney , 133 S. Ct. at 1016. 21. Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, 445 U.S. 97 (1980). 22. Id. at 105. 23. 135 S. Ct. 1101 (2015). 24. Id . at 1110. Following the decision in North Carolina Dental , the FTC has publishe......
-
Iowa. Practice Text
...inequitable not to apply this subsection to a pending case. See 15 U.S.C. § 35(b). 120. 477 N.W.2d 678 (Iowa 1991). 121. Id. at 684. 122. 445 U.S. 97 (1980). 123. 471 U.S. 48 (1985). 124. Northwestern Bell Tel. , 477 N.W.2d at 685-86. 125. Id. at 686 (quoting Neyens , 326 N.W.2d at 298). 12......