Healy v. Beer Institute, Inc., 491 U.S. 324 (1989)

Healy v. Beer Institute, Inc.

No. 88-449

Argued March 28, 1989
Decided June 19, 1989
491 U.S. 324

APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

Syllabus

A Connecticut statute requires out-of-state shippers of beer to affirm that their posted prices for products sold to Connecticut wholesalers are, as of the moment of posting, no higher than the prices at which those products are sold in the bordering States of Massachusetts, New York, and Rhode Island. Appellees, a brewers’ trade association and major producers and importers of beer, filed suit against state officials in the District Court challenging the statute under the Commerce Clause. The court upheld the statute on the basis of Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35. The Court of Appeals reversed, holding that the statute violated the Commerce Clause by controlling the prices at which out-of-state shippers could sell beer in other States, and that appellants’ argument that the statute was a proper exercise of the State’s regulatory authority under the Twenty-first Amendment was foreclosed by Brown-Forman. Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573.

Held: Connecticut’s beer price affirmation statute violates the Commerce Clause. Pp. 335-343.

(a) The statute has the impermissible practical effect of controlling commercial activity wholly outside Connecticut. By virtue of its interaction with the regulatory schemes of the border States, the statute requires out-of-state shippers to take account of their Connecticut prices in setting their border-state prices and restricts their ability to offer promotional and volume discounts in the border States, thereby depriving them of whatever competitive advantages they may possess based on the local market conditions in those States. Moreover, the short-circuiting of normal pricing decisions based on local conditions would be carried to a national scale if and when a significant group of States enacted contemporaneous affirmation statutes similar to Connecticut’s that linked instate prices to the lowest price in any State in the country. It is precisely such results that the Commerce Clause was meant to preclude. Brown-Forman, 476 U.S. at 579, 581-583; cf. CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88-89. Pp. 335-340.

(b) The statute, on its face, also violates the Commerce Clause by discriminating against interstate commerce, since it applies only to brewers and shippers engaged in interstate commerce, and not to those engaged solely in Connecticut sales, and since it is not justified by a valid purpose unrelated to economic protectionism. Pp. 340-341.

(c) Appellants’ reliance on the Twenty-first Amendment as authorizing the statute regardless of its effect on interstate commerce is foreclosed by Brown-Forman, 476 U.S. at 585, which explicitly held that that Amendment does not immunize state laws from Commerce Clause attack where, as here, their practical effect is to regulate liquor sales in other States. Pp. 341-342.

(d) Appellants’ reliance on Seagram, supra, to validate the statute is also foreclosed by Brown-Forman, 476 U.S. at 581-584, and n. 6, which strictly limited Seagram’s scope and removed the underpinnings of its Commerce Clause analysis. To the extent that it held that retrospective affirmation statutes do not facially violate the Commerce Clause, Seagram is no longer good law, since such statutes, like other affirmation statutes, have the inherent practical extraterritorial effect of regulating liquor prices in other States. Pp. 342-343.

849 F.2d 753, affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and KENNEDY, JJ., joined, and in Parts I and IV of which SCALIA, J., joined. SCALIA, J., filed an opinion concurring in part and concurring in the judgment, post, p. 344. REHNQUIST, C.J., filed a dissenting opinion, in which STEVENS and O’CONNOR, JJ., joined, post, p. 345.